{
  "title": "Optimal Fiscal Path Considerations: Portugal",
  "publication": "Selected Issues Papers, July 11, 2023",
  "sourceUrl": "https://www.imf.org/en/publications/selected-issues-papers/issues/2023/07/11/optimal-fiscal-path-considerations-portugal-535857",
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  "summary": "Despite achieving a rapid reduction in the public debt-to-GDP ratio in recent years, Portugal's debt ratio remains relatively high at 113.9 percent of GDP in end-2022.",
  "sections": [
    {
      "heading": "Summary",
      "content": "- Despite achieving a rapid reduction in the public debt-to-GDP ratio in recent years, Portugal's debt ratio remains relatively high at 113.9 percent of GDP in end-2022.\n- The paper employs an analytical model to determine the appropriate trajectory for structural consolidation to sustain ambitious debt reduction over the medium term, taking into account the uncertainties in the economic landscape.\n- The model points to a need for continued fiscal tightening between 2024 and 2028.\n- Optimal consolidation would be higher under higher longterm interest rates, lower medium-term growth prospects, or increased market sensitivity to debt."
    },
    {
      "heading": "Analytical model and findings",
      "content": "- Model purpose:\n  - Determine appropriate trajectory for structural consolidation to sustain ambitious debt reduction over the medium term under uncertainty.\n- Core finding:\n  - Continued fiscal tightening is required between 2024 and 2028 to sustain debt reduction.\n- Sensitivity drivers increasing optimal consolidation:\n  - Higher longterm interest rates.\n  - Lower medium-term growth prospects.\n  - Increased market sensitivity to debt."
    },
    {
      "heading": "Policy implications and recommendations",
      "content": "- Maintain a fiscal tightening path in the 2024–2028 period to support medium-term debt reduction objectives.\n- Monitor and respond to:\n  - Longterm interest rate movements.\n  - Revisions to medium-term growth prospects.\n  - Market perceptions and sensitivity to sovereign debt metrics.\n- Adjust the pace of consolidation upward if any of the sensitivity drivers (higher longterm interest rates, lower growth, greater market sensitivity) materialize."
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      "heading": "Key statistics and metadata cited in the content",
      "content": "- Public debt-to-GDP ratio: 113.9 percent of GDP in end-2022.\n- Recommended fiscal tightening window: 2024 and 2028 (presented as the period requiring continued fiscal tightening).\n\nSource: Ippei Shibata and Volodymyr Tulin, \"Optimal Fiscal Path Considerations: Portugal\", July 11, 2023.\n\n---\n\n Content in this bundle\n\n- Optimal Fiscal Path Considerations: Portugal; Selected Issue Paper No. 2023/045; June 1, 2023\n  - Optimal Fiscal Path Considerations: Portugal; Selected Issue Paper No. 2023/045; June 1, 2023 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - Optimal Fiscal Path Considerations: Portugal; Selected Issue Paper No. 2023/045; June 1, 2023 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/selected-issues-papers/issues/2023/07/11/optimal-fiscal-path-considerations-portugal-535857"
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    "Authors: Ippei Shibata, Volodymyr Tulin",
    "Published: July 11, 2023",
    "Series: Selected Issues Papers",
    "DOI: https://doi.org/10.5089/9798400247231.018",
    "Despite achieving a rapid reduction in the public debt-to-GDP ratio in recent years, Portugal's debt ratio remains relatively high at 113.9 percent of GDP in end-2022.",
    "The paper employs an analytical model to determine the appropriate trajectory for structural consolidation to sustain ambitious debt reduction over the medium term, taking into account the uncertainties in the economic landscape.",
    "The model points to a need for continued fiscal tightening between 2024 and 2028.",
    "Optimal consolidation would be higher under higher longterm interest rates, lower medium-term growth prospects, or increased market sensitivity to debt.",
    "Model purpose:",
    "Core finding:",
    "Sensitivity drivers increasing optimal consolidation:",
    "Maintain a fiscal tightening path in the 2024–2028 period to support medium-term debt reduction objectives.",
    "Monitor and respond to:",
    "Adjust the pace of consolidation upward if any of the sensitivity drivers (higher longterm interest rates, lower growth, greater market sensitivity) materialize.",
    "Public debt-to-GDP ratio: 113.9 percent of GDP in end-2022.",
    "Recommended fiscal tightening window: 2024 and 2028 (presented as the period requiring continued fiscal tightening).",
    "**Optimal Fiscal Path Considerations: Portugal; Selected Issue Paper No. 2023/045; June 1, 2023**"
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