Thursday’s Eurogroup finance ministers will make it abundantly clear to their Portuguese colleague that things are not going according to plan.
Finance Minister, Mario Centeno, is experiencing a little local difficulty with rising interest rates on Portuguese government bonds, a range of testy banking problems and socialist policies such as raising the minimum wage.
The Eurogroup’s president, Jeroen Dijsselbloem, is not impressed with Portugal, nor is Pierre Moscovici from the European Commission, Benoit Coeuré from the European Central Bank, Klaus Regling from the European Stability Mechanism, and the inevitable IMF representative, all of whom will be asking some direct questions as to how Portugal started off by following the rules with such diligence under Passos Coelho and now, under Antonio Costa, things are slipping from their beloved Eurocratic ideals.
Top of the agenda is Portugal’s economic state based on the last post-Troika evaluation that took place at the end of 2016,.
The long-term interest rate rise of Portuguese bonds from 3.2% in mid-November 2016 to the current 3.8% - 3.9% is one problem, another is Portugal having one of the highest public debts in Europe.
Then there is the mishandling of who is running Caixa Geral and how much its recapitalisation will be costing this year. There is no buyer yet announced for Novo Banco: the Eurogroup has plenty to complain about.
Mario Centeno will be given a chance to present his views on the Portuguese economy, helped by last year’s target-beating deficit below 2.4% of GDP, but little else, apart from lower unemployment.
The public can expect the usual ‘agreed form of words’ at the enfd of Thursday’s meeting but the facts are the facts, Portugal is a long way from the economic recovery its government is keen to promote.
Comments
Couple this with the fact that the Euro will have crashed and disappeared within 2 years (we have another Greek repayment falling due soon and they're skint) and we have big change ahead.