Portugal is far from financial stability

The Partido Socialista spokesman Oscar Gaspar has commented that the budget deficit of 5.9% was a proof that the country is far from a situation of fiscal consolidation, urging the Government to change the recipe of "cuts upon cuts."

"After so many sacrifices demanded of the Portuguese, namely the huge increase in income tax and the cuts in social services, despite all these sacrifices the truth is that the deficit is at 5.9%, i.e. very close to 6% and far from the 5.5% that is the current goal of the government."

In the riveting Quarterly National Accounts by Institutional Sector, the Institute of National Statistics showed that the government deficit reached 5.9% in the first three quarters of the year, a reduction of just 0.2% when compared to the deficit recorded in late September 2012.

"We are far from a situation of fiscal consolidation," said Oscar Gaspar, insisting that "cuts on cuts do not solve any of the country’s problems, not even the problem of public finances."

Gaspar added that the policy of cuts calls into question the present and future of the country because the economy "can not stand up to this budget situation" adding that the only expenditure that has been reduced has been capital expenditure.

"The only place where the government is cutting back is on investment, the recipe is not working" and that this is "far from the right path."

As for the interest paid to banks over the period, the Troika and the buyers of Portuguese government debt cost the taxpayers a total of €5.5 billion between January and September 2013, €162 million more than the same period of 2012. Add this to the €700 million shelled out to keep Banif afloat and the year end may not look as rosy as the Prime Minister fondly imagined in his Christmas speech.

Access to markets will determine 'success or failure of Portugal’ according to the vice president of the European Commission, Olli Rehn.

In an opinion article published in the Economic Journal, Rehn recognised that the progress made by Portugal is notable, but argues that it must continue to implement structural reforms even after the end of the bailout programme.

The commissioner also said that Portugal must achieve the trick of focussing on measures to promote growth and employment, without forgetting the sustainability of public debt. Thanks Olli.

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