Portugal managed to reduce its public debt by more than a third over the past six years, representing a significant cut in the country's exposure to financial risks. This outcome is presented as one of the main shields protecting the Portuguese economy from the effects of rising interest rates.
In addition to the debt reduction, the article highlights that only a small portion of Portuguese public debt is subject to interest rate hikes. This additional characteristic serves as complementary protection for the country's public finances.
The combination of these two factors—the substantial decrease in debt and the limited exposure to interest rate fluctuations—helps mitigate the negative impact that rising interest rates would normally have on an economy more dependent on external financing.
According to the article, Portugal's fundamental problem is no longer about convincing financial markets of the country's budgetary discipline. This issue, which was central during the sovereign debt crisis, has been overcome, pointing to different challenges in the current economic environment.
