The Minister of Finance, Fernando Medina, said this Friday that “there will be impacts” from the interest rate hikes announced by the European Central Bank, and that only the reduction of public debt will be able to combat them.
“From the financial point of view of the State, there will naturally be impacts, which will be deferred over time because this new policy will have an impact on the new issues that are going to be made, this being a general movement in terms of rates and this It is going to have an impact that we will have to know how to manage,” said the minister questioned by journalists.
Fernando Medina is celebrating June 10 in Paris, with the Portuguese community, having participated in a reception at the Portuguese Embassy in France.
On Thursday, the Board of Governors of European banks decided to maintain interest rates this month, but confirmed the end of asset purchases as of July 1 and considered that the necessary conditions were in place for rate hikes.
To protect Portugal from this increase, the minister argues that debt reduction is the way forward.
“Only the reduction of public debt is what allows us to charge interest to support an increase in interest rates, ultimately reducing the amount we have indebted and the amount we have to refinance each year,” he said.
Asked about a possibility of reducing public investment in the country, that is, a reduction that affects the execution of the Recovery and Resilience Plan, the minister stated that these investments will not change.
Today we have a large public investment program that is fundamentally based either on the execution of the PRR, which is not compromised by these policies, also with investment supported by community funds, which is not compromised either, and in relation to various businesses specific areas of private investment, supported by financing already contracted”, he stated.
The minister indicated, however, that Portugal has been in contact with the European Union “to be attentive and careful in how the intermediate goals of the PRR are viewed”.
“Because with higher prices,” he said, “hiring can lead to an overall price increase.”
However, the implementation of the PRR must be accelerated to help the economic recovery.
“The bet is to accelerate the PRR and it will make a very important contribution for 2023 and the following years,” the minister concluded.
Source: Observadora
