In an interview with Lusa, when asked if a minority government could be a risk to the Portuguese economic outlook, Alfred Kammer admitted that "uncertainty is always something negative" and that one should "try to reduce it" as much as possible.

"Whenever there is an increase in uncertainty, no matter where it comes from, there is an impact, namely on investment, because of the outlook. This is a problem and it doesn't matter if it comes from a minority government, or from the perception of a change in policies, or if it comes from high external uncertainty, including from a geo-economic fragmentation", he said.

However, Alfred Kammer highlighted that "Portugal has had very strong growth in recent years", despite the slowdown expected for this year, but still above the Eurozone.

"What we are seeing are the effects of the European monetary policy, which are depressing demand, but also decreasing external demand, but growth has been quite strong and quite robust over the last few years", he points out.

The IMF revised upwards Portugal's economic growth to 1.7% this year, showing itself to be slightly more optimistic than the Government (1.5% in a scenario of unchanged policies), and cut the inflation rate to 2.2%, according to the economic forecasts released this week.

In the portrait he draws of the Portuguese economy, the IMF official highlights the trajectory of reduction of the public debt in relation to GDP in recent years, having been set at 99.1% in 2023.

"Portugal has done an exceptionally good job in reducing public debt over the last decade. It is one of the fastest declining debt-to-GDP ratios in Europe after the pandemic, having fallen from 135% of GDP to 99% of GDP", he points out.

Alfred Kammer defends the importance of this option, arguing that a high debt creates vulnerabilities and is "a burden" when higher interest rates raise the cost of debt servicing.

"It has been a remarkable achievement and we think that prudent fiscal policy should continue to be pursued going forward", he recommends, arguing that buffers should be created for additional public spending in the future.

He thus lists among the suggestions for Portugal "a comprehensive fiscal reform, eliminating or reducing budget expenditures, gradually increasing the carbon price and its taxation and focusing on some of the spending pressures that are emerging due to the ageing of society".

Alfred Kammer also argues that "public investment has an important role and for that we need to have fiscal space".

The IMF forecasts a budget surplus of 0.2% of GDP this year and a debt ratio of 94.7% and 80.1% in 2028.

The Washington-based institution this week improved by 0.1 percentage points (pp) the forecast for global growth to 3.2% this year and points to a 0.8% advance in the Eurozone economy this year.

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