4  BIS central bankers’ speeches  Figure 4 Public debt as a percentage of GDP  Note: Assumptions of this scenario: (i) fulfilment of the Programme targets in 2013 and 2014; (ii) increase of the structural primary balance by 0.5% of GDP per year until 2020, reaching the MTO; (iii) consolidation effort exclusively on the expenditure side; (iv) increase in the implicit interest rate on public debt to 4.4% in 2020 (3.9% in 2012).
Source: Banco de Portugal. This exercise corresponds to an aggressive adjustment profile in terms of public debt reduction. My preference goes to a smoother debt adjustment path, compatible with a parallel decline in the tax burden.