Portugal is one of the countries in the world in which public debt will decline the most until 2028, according to calculations by the International Monetary Fund (IMF) published in Financial Monitor this week. It’s a drop of 38.4 percentage points since the peak of 2020, the year the COVID-19 pandemic sent public debt soaring in most countries. In Europe, only two economies – Greece (which underwent debt restructuring) and Cyprus – made significant debt reductions over this period (see chart).

Vitor Gaspar’s IMF team forecast puts Portugal outside the most indebted club on the planet (as a percentage of GDP) over the next five years. In 2024, France took precedence over Portugal in that group, and the following year it was the turn of Spain and Belgium to record higher debt ratios than Portugal. Which means that the Portuguese economy leaves the third place in the euro area and the sixth in the world most indebted. But that year the International Monetary Fund revised its debt estimate slightly higher, which now stands at 112.4%, putting it above Belgium, Spain and France. In 2028, the International Monetary Fund hopes, Portugal’s debt will be below the 100% threshold of GDP – which has not happened since 2009 – and oust Portugal from the group of 15 heavily indebted countries.

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