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EU warns Portugal to watch debt amid gloomy outlook

Portugal doesn’t have the highest budget deficit in the European Union but there are concerns about its budgetary stability, the European Commission’s executive vice president said at a press conference in Brussels on Wednesday, according to Lusa news agency.

“The forecasts estimate a high public debt and that is something that has to be taken care of”, Executive Vice President Valdis Dombrovskis told the media in Brussels on Wednesday.

On Wednesday the EU warned that governments must  watch their debt amid the pandemic. The warning was issued in its autumn economic policy package. 

Dombrovskis said the recession expected this year for Portugal was “slightly below the EU average.”

Earlier this month, the EU improved its forecast for Portugal in 2020, saying it expected a contraction of 9.3% of Gross Domestic Product (GDP) this year, compared to 9.8% previously forecasted.

But in its autumn macroeconomic forecasts, the Commission worsened its deficit and public debt forecasts, expecting a budget balance of -7.3% of GDP and debt amounting to 135.1% of the GDP.

“In the case of Portugal, we conclude that, in general terms, Portugal’s budget plan is in line with the recommendations made by the European Council in July as it provides stimulus to the economy, financing for necessary health measures and support for companies and work to allow economic recovery “, Valdis Dombrovskis  said.

Brussels agreed to pause the EU’s deficit back in March and encouraged leaders to battle COVID-19.