The Canadian rating agency DBRS Morningstar maintained Portugal’s long-term debt at A, which corresponds to the sixth highest level on the rating scale. The outlook for the evolution of debt quality was changed from “stable” to “positive”.
“The positive outlook reflects DBRS’ assessment that Portugal’s debt vulnerabilities continue to decline, thanks to the rapid reduction in the public debt ratio (relative to GDP), as well as the sustained improvement in external accounts”, the agency highlights in its report released this Friday.
DBRS recalls that Portugal’s public debt ratio fell from 112.4% of GDP in 2022 to 99.1% in 2023. “This is the lowest level since 2009 and is 17.5 percentage points lower than in 2019. And this ratio is expected to continue to fall in the coming years, albeit at a slower pace, driven by sizeable primary surpluses and moderate nominal GDP growth,” it says.
“After recording a budget surplus of 1.2% of GDP in 2023, DBRS expects the new government to remain committed to achieving small surpluses in the public accounts. Although the fact that the new government does not have a majority in parliament complicates its ability to legislate and could undermine its stability, DBRS considers the risk of Portugal deviating significantly from its commitment to a prudent fiscal policy to be relatively low.”
The last of the four major agencies – Fitch, Moody’s, Standard & Poor’s and DBRS – to place Portugal at the coveted A level was S&P, in early March. Until now, S&P was also the only one with a ‘positive’ outlook, but now DBRS also assesses the evolution of sovereign debt at that level.
Source: www.jornaldenegocios.pt
