The Portuguese government announced that in 2021 the public debt ratio had registered the biggest drop since the Second World War, after having risen in a record way in 2020 because of the pandemic. However, according to Eurostat data, Portugal was the third country that most reduced public debt last year, behind Greece and Cyprus. In addition, it continues to have the third highest ratio in the EU.
According to a report by ECO, Portugal's public debt fell by 7.8 percentage points from 135.2% of GDP in 2020 to 127.4% of GDP in 2021. However, it had risen by 18.6 percentage points from 2019 (116.6% of GDP) to 2020 because of the double impact of the pandemic on debt and GDP.
In the case of Greece, where the ratio fell by 13.1 percentage points, public debt dropped from 206.3% of GDP in 2020 to 193.3% of GDP in 2021. Cyprus saw its ratio shrink from 115% of GDP in 2020 to 103.6% of GDP in 2021, minus 11.4 percentage points. They were the only member states of the European Union to reduce debt more than Portugal.
Despite this strong reduction in the ratio, Portugal continues to have the third largest public debt in the European Union, only surpassed by Greece and Italy. The objective of the current Government is to remove the country from the club of the most indebted countries in the EU, being replaced by France, Belgium and Spain. By 2026, the goal is to get close to the psychological threshold of 100% of GDP.
“We want and we will be able to remove Portugal from the group of economies with the highest public debt in Europe”, said Fernando Medina this Wednesday in the opening speech of the debate on the 2022-2026 Stability Program, explaining that this is “not because we want any distinction, but because this is the best way to defend companies and families”.