BdP welcomes IMF evaluation and says recommendations will be considered

O IMF concluded the Financial Sector Assessment Programme (FSAP) in Portugal, which is part of the mandatory periodic evaluations to which financial systems of systemic importance are subject.

“The BdP welcomes the conclusions of the evaluation,” said the financial supervisor in a statement released today.

The IMF considered that the national financial system remains globally stable and resilient and that the banking sector has adequate levels of capitalisation, liquidity and profitability.

On the other hand, it highlighted progress in the robustness of sector regulation and supervision, as well as in the effectiveness of macroprudential policy.

However, the IMF has identified some risks, inter alia, associated with exposure to residential real estate and sovereign debt.

Among the recommendations left is the deepening of systemic risk monitoring, the adoption of talent attraction and retention policies, improvements in macroprudential supervision, cybersecurity and crisis management, and the strengthening of the legal framework of macroprudential policy.

“ The recommendations now published will be considered in the future work of Banco de Portugal to continue to ensure financial stability and a robust and resilient financial system ", pointed out the institution led by Álvaro Santos Pereira.

Today, the IMF has also revised the growth estimate of the Portuguese economy, from 1.9% to 1.7% this year, in the report on Article IV.

This projection represents a downward revision of the April World Economic Outlook (WEO) estimate, which had also been revised at 0.2 percentage points compared to last October.

This organization also anticipated that Portugal's budget balance will be zero this year, which compares with the forecast deficit of 0.1% of GDP in April.

In the same report, the IMF also warned that support for young people for the purchase of the first house ended up increasing demand and aggravating market imbalances and should therefore be withdrawn.

“The new reform package for government housing contains elements that can stimulate supply, but increase tax expenditure,” the institution stressed, which recommended that “in order to achieve lasting improvements in accessibility, reforms should aim at reducing supply restrictions, such as making licensing, permission, zoning and land use (as planned), rebalancing real estate taxation and improving the functioning of the rental market.”.