Fitch says the continued decline in public debt and better-than-expected budget results are some of the reasons for the rise. The agency also highlights the resilience of the banking sector.
Fitch expects a budget surplus this year of 0.8% of GDP. “The expected decline of more than 38 percentage points in GDP compared to the pandemic-related maximum in 2020 is the largest among those classified as Category A SWFs,” he notes.
Believing that there is a “high degree of commitment to budgetary consolidation on the part of the current Portuguese government, whose term ends in 2026,” Fitch analysts note that the public debt ratio in 2025 will be well above the “A” average, but risks Debt sustainability is mitigated by a moderate debt repayment schedule.
Looking ahead, the report warns that a downward reversal of public sector debt, a serious economic recession or an external shock that hurts the country’s growth potential could lead to a downward revision of the current valuation.
The “best assessment” of Portuguese debt in 12 years
The North American agency thus becomes the second agency to rate Portuguese sovereign debt at A-, after the DBRS did so in July. This is the first time in 12 years that Portugal has risen to the level of Ratings a.
The Ministry of Finance said, in a statement, “The succession of positive assessments by risk rating agencies confirms the importance of the debt reduction strategy promoted by the government, with the aim of defending the economy.”
The ministry says so “The recovery in position among economies with low public debt risks translates into lower interest rates for Portuguese families and companies,” Highlighting that “containing financing costs is particularly important in the current context of a generalized rise in interest rates.”
In April, Fitch left Portugal’s sovereign debt rating unchanged, after improving the rating in October last year. evaluation Portugal from BBB to BBB+ with a stable outlook.
Hey evaluation It is an assessment conducted by financial rating agencies, and it has a significant impact on the financing of countries and companies, as it evaluates credit risks.
“Ratings The “A” level (A-/A/A+) translates into a country’s access to a greater number of international investors who invest their money in sovereign debt with higher quality risk levels. This leads to a lower cost of financing the Republic, and thus lower costs to taxpayers.”
The next agency to comment on Portugal is Moody’s, on November 17.
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