The financial rating agency Fitch told Lusa this Tuesday that it “follows very closely the political developments in Portugal”, sending further comments to the public process for the next review of the national ‘rating’, scheduled for November 12th.
“We follow political developments in Portugal very closely. At this time, we are not going to comment on the budget balances given the proximity of our next review of the sovereign rating, scheduled for November 12 ”, can be read in a Fitch response to Lusa’s questions.
Lusa agency also contacted a DBRS Morningstar and Moody’s, which are unavailable for comment, and is awaiting a response from Standard and Poor’s.
The Assembly of the Republic today began the debate on the general proposal for the State Budget for 2022, which will be rejected in Wednesday’s plenary vote, if the vote against announced by BE and PCP is maintained.
If the votes against the PCP and BE materialize, determining the ‘lead’ of the State Budget, the President of the Republic has already announced that he will dissolve the parliament, precipitating the organization of previous advances.
Despite the lack of comment, one referred from Moody’s to its Credit Opinion expressed on September 21, after having raised the Portuguese ‘rating’ from Baa2 to Baa3 four days earlier.
In that note, the US agency lists, among the “factors that will lead to a downward revision” of the ‘rating’, a “declining political support for prudent fiscal policies, including an increase in requests for greater spending”.
Moody’s assessment of Portuguese institutions and the strength of national governance is rated higher (aa3) than Italy (Baa3 stable) and Spain (Baa1 stable) and lower than Ireland (A2 positive).
“Governance and policy enforcement reflect the authorities’ implementation of debt reduction and reforms, as well as slow progress in addressing the weaknesses of the banking sector,” the note reads.
On September 17, the US rating agency Moody’s upgraded the Portuguese debt rating from Baa3 to Baa2 today, with a stable outlook, anticipating the expectation of an improvement in the economy’s growth in the long term.
The rating now assigned to Portugal (Baa2) is the highest since 2011 and the first since in 2018 Moody’s removed the country from the ‘trash’ by assigning it a rating of Baa3.
Before, on September 10, Standard and Poor’s (S&P) did not comment today on the Portuguese debt ‘rating’, keeping it at the BBB investment level, the same happening with the stable outlook.
On August 27, Canadian agency DBRS Morningstar maintained the ‘rating’ of Portuguese public debt at “BBB” (high) with a stable outlook.
Previously, on May 14, Fitch also maintained Portugal’s rating at BBB, investment level, continuing the country with a stable outlook.
A ‘rating’ is a rating assigned by financial rating agencies that assesses the credit risk (ability to pay debt) of an issuer, which can be a country or a company.
The State Budget proposal for 2022 delivered to parliament predicts that the Portuguese economy will grow 4.8% in 2021 and 5.5% in 2022.
In the document, the executive estimates that the deficit of national public accounts should be 4.3% of the Gross Domestic Product (GDP) in 2021 and drop to 3.2% in 2022, also predicting that the Portuguese unemployment rate will decrease to 6.5% next year, “reaching the lowest value since 2003”.
Public debt is expected to reach 122.8% of GDP in 2022, compared to an estimate of 126.9% for this year.