January 24, 2019 / 6:24 PM / 4 months ago

Portugal's public debt on 'downward trend' - Fitch

LISBON, Jan 24 (Reuters) - Portugal’s public debt is still high but Fitch is confident that the country’s debt trajectory is on a “downward trend”, the director of sovereign ratings at the agency said.

The Portuguese government plans to cut the deficit to 0.2 percent of GDP in 2019 from 0.7 percent in 2018, hoping to lower the public debt ratio from 121.5 percent in 2018 to 118.5 percent the following year.

Despite the decline in public debt ratio, Portugal still increased its debt stock to a record 251.48 billion euros in November 2018.

“Of course this (debt level) is still a rating weakness but clearly we are now much more confident that public debt in Portugal is on a downward trend,” Douglas Winslow said at conference in Lisbon on Thursday.

Fitch maintained the BBB rating for Portugal’s public debt in November 2018, and kept its outlook at “stable”. A year before, in December 2017, the agency removed Portugal from ‘junk’ level, where it placed the country in 2011, in the midst of a severe debt crisis.

Winslow highlighted Portugal’s ability to reduce its public deficit from 7 percent in 2014 to less than 1 percent in 2018, making the country “a wonderful story from the point of view of rating”.

Standard & Poor’s was the first of the three major rating agencies to remove Portugal from junk level in September 2017. (Reporting by Sergio Goncalves; Writing by Catarina Demony; Editing by Axel Bugge and Alison Williams)

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