The International Monetary Fund may never be satisfied and today warned that for Portugal "there is a real risk that the target budget deficit of 2.7% of GDP will not be met without further cuts in spending," adding that it is unlikely that Portugal’s austerity measures can be eased without containing spending on wages and pensions.
The statement follows the second post-Troika visit and highlights that which the government already knows but will not attempt due to the Autumn elections.
The performance of state revenues in the first four months of the year, "continues the uncertainty" and the IMF now thinks that whatever is achieved during the rest of the year will not be enough for Portugal to hit its targets.
The Troika technical mission estimates the deficit will be 3.2% of GDP yet Passos Coelho and his Minister of Finance have stuck to a probably unachievable lower figure.
The IMF, led by the formidable Christine Lagarde, stated that Portugal’s economic programme to 2019, set "ambitious goals for reducing debt" but that the programme fails to specify the measures needed to achieve these goals and that the growth assumptions are a tad optimistic.
Despite recent highly publicised early repayments to the IMF which have served to improved the structure of Portugal’s public debt, the "medium-term financing needs remain considerable" and Portugal's bond rates have been creeping up with ten year paper hitting an uncomfortable 3%.
The IMF at least believes that the recent rebound in Portugal's exports and in investment "may suggest that a structural transformation of the economy is starting, which can promote further growth in the medium term" but it reiterated that "these developments have to accelerate in coming quarters."
To improve growth prospects, the recipe is the same as it always has been, the "continued implementation of structural reforms."
The IMF mission reported that "it is essential to ensure that statutory changes are accompanied by results on the ground to reduce structural bottlenecks to growth."
Recent privatisations were at least given the thumbs up, as was the miniscule reduction in natural gas prices for consumers, but reforms to improve the efficiency of public services continue to be avoided by the Passos Coelho government whcih needs to sack thousands of public employees but realises that they then are unlikely to vote for the coalition.
The IMF report pays no regard to the political reality in Portugal with a government hesitant now to do anything that will upset voters and stalling on the harsher actions that are needed to reform the economy.
This easing off may have come too late and be a critical misreading of the population’s mood as lower pensions, higher costs, higher taxes, more and higher fines, high unemployment, and a government that increasingly has become intolerant of its citizens may shift waves of voters back to the shores of a socialist government.
For IMF report summary, see: http://www.imf.org/external/np/ms/2015/061215.htm
Comments
Early last week those in charge, awarded them selves 34 New Cars at the Tax Payers Expense !
+ Early this year they also bought a fleet off luxury cars for there "buddies" running the Banco de Portugal.
This lot could not run a fiss up in a pub ,with out making a complete & utter balls up off it.
And the next lot will be no better,sadly
And that makes things really difficult in a civilised (and mondialised) world where everything is based on these "facts and figures". As long as Portugal reaches the "90% corruption status" finances and economy will remain a mess and a graveyard exception made for the happy few of course. And no election will change that situation in no way !
Made clear by Snr Calado himself - High Commissioner for Migration; the government body tasked with promoting integration, and dealing with racial discrimination. Who usefully for Portugal also oversees Portugal's Commission for Equality and Against Racial Discrimination, which handles racial discrimination complaints
"Despite several weeks of emailing back and forth after (the BBC) interview, (for further information) the High Commission ... say they lack the resources to process the data"
Bizarrely, by never specifying the race of an aggrieved person - Portugal scores well in MIPEX. The exact opposite of reality !
This needs constant re-petition; re-publication and further discussion. So pass it on.
http://www.bbc.co.uk/news/magazine-32419952
For example - future inward investors need to be absolutely clear that a country like Portugal will fail 99.9% of Irish or British passport holders that are not in mixed Portuguese race relationships.
Either totally and packing us off back home quite often with debts; mortgages on un-finishable property or doing their damnedest to empty our pockets whilst waiting to 'get the message'.
Instead the opposite. Cunningly crafting obstructions to growth in their laws; the bottlenecks referred to here. Portugal as with Greece intentionally keeping outsiders - out.
And if not a legally permissible obstruction exists then good old fashioned racial prejudice can fill in the gaps !
Portugal is still riddled with these racists!
A current example is licences for say a Bed & Breakfast and holiday room rental. Alojamento Local.
Which should take say 2 half hour free visits by a local tourism expert firstly to inform what, if anything, needs to be done - secondly to check it has been done. Being on a bonus for getting the start up right means the expert is ironing out any bottlenecks and delays.
But no. Still endless delays and expense for 'outsiders' in this severely retarded country!
Read the IMF statement at :
http://www.imf.org/external/np/ms/2015/061215.htm
how about the abolition the demand for licences for businesses!