Luxembourg, June 20, 2025 (Lusa) - Portugal's government said Friday that it was aware of and was taking precautions against the “long-term challenges” to the country’s public debt and accounts arising from the ageing population, following warnings from the eurozone bailout fund about the budgetary impact.
‘The report says Portugal and many countries, [...] have ageing populations and the demographic challenges place long-term pressures on public debt, as they do on public finances and competitiveness,’ said Finance Minister Joaquim Miranda Sarmento.
Speaking to Portuguese journalists at the end of the meeting of European Union (EU) finance ministers in Luxembourg, the minister pointed out that “the issue of demographics and population ageing predates yesterday’s European Stability Mechanism report”.
“It is something we know, [that] there are long-term challenges regarding the demographic issue and this puts long-term pressure on public debt,” he said.
The minister also recalled that “all projections point to Portuguese public debt remaining below the eurozone average in 2026, which is a very important milestone and will occur for the first time since 2008.”
“We must continue to reduce public debt in a decisive, constant and significant manner to bring it closer and closer to 80% by the end of the decade, or even below 80% if possible,” concluded Joaquim Miranda Sarmento.
In a report released on Thursday, the European Stability Mechanism (ESM) highlighted the importance of strengthening the sustainability of Portuguese public debt, suggesting the “swift implementation” of the Recovery and Resilience Plan (PRR) and a focus on immigration to reinforce it.
“The difficulties of long-term growth and demographic changes mean that maintaining public debt sustainability requires strong action in the medium and long term. The swift implementation of investments and reforms under the recovery and resilience plan [PRR], combined with positive net migration, will help to contain these risks,” the ESM said.
In the chapter on the country, the euro rescue fund pointed out that, despite a “clearly downward trajectory” of Portuguese debt, it remains high and, combined with low productivity and an ageing population, poses “structural challenges to debt sustainability in the medium and long term”.
“It is essential to implement the RRP promptly and to implement key structural reforms, while maintaining prudent fiscal policies,” the ESM further emphasised.
Based in Luxembourg, the ESM is an intergovernmental organisation created by euro area member states to prevent and overcome financial crises, and maintain long-term financial stability and prosperity by providing loans and other types of financial assistance to countries in serious financial difficulty.
The ESM continues to monitor Portugal’s budgetary situation following the assistance provided to the country during the euro area sovereign debt crisis in 2011.
ANE/ADB // ADB.
Lusa
