Moody’s raised the rating of the republic to Baa2 on Friday. For three years, the rating agency did not change Portugal’s rating, which remained at the Baa3 level.
This was the last rating in the quality investment category and only one notch above the junk level.
It is the agency that assigns the country the lowest rating, but at the same time has the best prospects for the national economy. The agency confirmed this Friday that it has raised the rating by one notch.
As for the outlook, long-term credit quality development, it has been revised from positive to stable and is now equivalent to the point of view of other rating agencies adopted by the ECB to assess the eligibility of sovereign debt for its program. purchase of assets, namely Fitch, S&P and Canadian DBRS.
In a statement confirming the upgrade, the agency cites “expectation that Portugal will confirm improved long-term growth through the use of European Union NextGen funds (PRR) and structural reforms” and demonstrates “confidence in this. In the coming years, Portugal’s sovereign debt will begin to decline due to strong economic growth and increased efficiency of fiscal policy. ”
The Ministry of Finance has already considered that this is “a very positive and reliable sign for the country.” “Moody’s has not assigned such a high rating to the Portuguese state since 2011” and “this is also the first increase in the rating of the Portuguese Republic since the beginning of the pandemic, which is a very positive sign for the credibility of the country, as well as for security and financial resources. family and business stability ”.
“The reported improvement comes in the context of the crisis, after a year and a half of the pandemic, and sends a very strong signal about the economic and fiscal strategy adopted by the government so far, as well as confidence in the country’s ability to recover. from the pandemic crisis, ”says Finance Minister João Leau.
The minister also refers to the fact that “already in 2021 we expect to pay interest about 3 billion euros less than in 2015. This result is largely attributable to the rigor and fiscal responsibility of the past six years. It is important to continue this path, resuming the path of reducing the public debt-to-GDP ratio, which was only interrupted by the pandemic. I have ambitions that after Moody’s other agencies will raise the rating, improving the financing conditions for the republic, in order to reduce the country’s burden and increase the income of all Portuguese. “
