Despite all the progress towards the reduction its NPL stock pile since 2016’s peak, Portugal’s bad debt level is still among the highest within the Eurozone, warns the European Stability Mechanism (ECB), while recalling the need to further enhance the efforts to reducing it.

At a conference organized by Fitch in Lisbon a few days ago, Matjaž Sušec, the assistant director of the Strategy and Institutional Relations of the ESM, noted, that the Portuguese banking sector is definitely more resilient, «but some of the challenges are still there».

Four recapitalizations allowed for the banking system to go through a major «clean-up» of its accounts. The NPL level is now one third below the peak recorded in 2016, and in 2018, the country’s banking system presented its best results since the crisis. However, regardless of these signs of progress «Portugal still presents very high levels of NPL, one of the highest in the Eurozone», Sušec added.

For the ESM’s director, «enhancing asset quality a very important step if we want to improve the banking system’s resilience and its capacity to finance the economy».

The specialist also noted that the debt pile of the country was still very high, but that the current recovery has allowed for the country to have a larger fiscal buffer, as fiscal revenue increases and debt progressively decreases.

During his speech, the ESM’s representant noted that Portugal has reinforced its status as a country which «successfully overcame the crisis» and that the country’s positive economic performance has opened the door to new financial markets, making it «less vulnerable to shocks».

Original story:Dinheiro Vivo | DV/Lusa
Photo: FreeImages.com / Svilen Milev
Translation & Edition:Prime Yield