Portugal already has a plan to reduce debt by 39%

Portugal can reduce its debt from the current 130.7% to 91.7% if payments are deferred to 60 years and interest is reduced to 1%. The plan is not of the Government, reluctant to any unilateral initiative, but of its socialist party and the Left Block, which supports it in parliament.


The Government does not want to hear about debt restructuring, but it nevertheless gave permission to set up a parliamentary committee to study a reduction plan. It was not his initiative, but a demand of the Left Bloc in exchange for giving him parliamentary support for the entire legislature. After a year of meetings, the plan is completed and sent to the Government.

In short, the study to restructure debt is based on not touching the debt that affects private funds and the IMF. For the rest, payments would be extended from the current 15.6 years on average to 60, and interest rates would fall from the current 2.4% on average to 1%.

MORE INFORMATION
The union of the left is strengthened
DBRS, the only agency that keeps Portugal out of the junk bond
Apart from the measures that depend on negotiations with third parties, the working group presents four that are of full power of the Government: a reduction of the provisions of the Bank of Portugal, which the Government considers excessive and with which the State would have more annual dividends ; an advance payment to the IMF, which has the highest interest loans; the optimization of the State's deposits and the reduction of the average duration of the debt issued. Altogether, the application of these measures would save the state 451 million this year (0.20% of GDP) and 2,788 million in 2022.

To conciliate the speeches of the ruling socialist party and the vociferous Left Bloc (NATO exit, debt forgiveness ...), the language of study measures every word; for that reason it is not a plan, but "merely an example of the type of restructuring that would be possible", but also warns that to continue with the current level of debt should increase taxes or reduce social services.

The plan would only be activated in a joint negotiation within the European Union

By virtue of this balance between the different strengths that make up the working group, at no time does it speak of the forgiveness of part of the debt, "nor would it be a breach, but would be done in agreement with the European partners."

Reactions to the plan have not been delayed. The Government completely disassociates itself from it, although its deputies by have participated to the undersecretary of finance, and the PC, the other party that supports the Government in Parliament, calls it "micropopuestas", with solutions "equal to others" do not respond to the "deep problems", according to Deputy Paulo Sá. Reactions expected, because the PC was not going to applaud an idea of ​​the Left Block, its electoral competition.