Portugal is warned of two ‘terrible years’
By Peter Wise and Jonathan Ford in Lisbon
Published: June 15 2011 18:17 | Last updated: June 15 2011 18:17
Pedro Passos Coelho has no plans to leave his modest fifth-floor flat in an unfashionable dormitory suburb of Lisbon for the plush official residence he is entitled to use after he is sworn in next week as Portugal’s new prime minister.
Noted for his thrift, the 46-year-old leader of the centre-right Social Democrats (PSD) is temperamentally well prepared for the formidable task of implementing the tough €78bn rescue programme the country has agreed with the European Union and International Monetary Fund.
Portugal faces two “terrible years” of deep recession and record unemployment, he acknowledged in an interview with the Financial Times, before the country can return to growth and regain the confidence of international investors.
This will involve “a very rigorous programme of austerity and structural reforms” covering everything from slashing public deficits and extensive privatisations to shake-ups of justice and education.
“There is no alternative,” he says, the adjustment programme “cannot fail”. Failure, he says, would prevent Portugal from returning to the financial markets in 2013 and leave it in a similar predicament to Greece, which has had to ask for a second bail-out. The Portuguese economy would be trapped in a recessionary spiral after a projected 2 per cent contraction both this year and next.
After winning a decisive election victory on June 5, Mr Passos Coelho will take office at the head of a majority government coalition between the PSD and the smaller conservative Popular party (CDS-PP). He has inherited a daunting programme, agreed with the EU and the IMF, that requires his government to cut the budget deficit from 9 per cent of gross domestic product last year to 3 per cent in 2013 and to implement structural reforms that no previous government has attempted.
Not content with this challenge, he aims to go beyond the requirements of the rescue agreement, promising, for example, to accelerate and expand the privatisation programme. The state-owned broadcasting media is to be sold off, leaving only one non-commercial public service channel. He will also privatise up to 49 per cent of water utilities.
Privatisation is not just a question of raising revenue, Mr Passos Coelho says. Portugal needs foreign investment to support growth, which will have to be led by the export sector. The government will throw open the doors to non-Portuguese investors.
“We will be absolutely transparent and rigorous,” he says. “There will be no hidden agenda.”
He would also like to meet deficit-reduction targets ahead of schedule, although he fears the previous Socialist government may have left some “surprises” on the books.
Economists do not doubt Mr Passos Coelho’s commitment to spending cuts, but worry austerity will choke off growth. While structural reforms in areas such as education, labour legislation and justice should ultimately bear fruit, this will take time to ripen. Mr Passos Coelho has less than three years to turn the economy round.
Mr Passos Coelho is staking his hopes for growth on a sharp “fiscal devaluation” — a sharp cut in company contributions to employees’ social security payments — which should cut labour costs and make exporters more competitive. But he says it is too early to determine the scale of the cut, which will have to be revenue-neutral because of the country’s deficit.
There is no doubt that Mr Passos Coelho believes in what he is doing. He sees the rescue programme as a unique opportunity to implement essential reforms that previous governments have avoided for the past 30 years. He is convinced that he is the right man to do the job. The “serious difference” between his party and the Socialists of José Sócrates, the outgoing prime minister, he says, is that the PSD “believes in the changes we have to make”.
Mr Sócrates, on the other hand, was forced into a rescue package with the EU, IMF and European Central Bank “because there was no other way to get the money”.
Mr Sócrates has accused Mr Passos Coelho of using the EU-IMF agreement as a pretext for “the most radical rightwing programme ever proposed in Portugal”.
But Mr Passos Coelho says 80 per cent of voters backed the three parties who signed up to rescue agreement — the PSD, the CDS-PP and the Socialists. This, he says, is an important difference between Portugal and Greece, where larger sections of society are strongly opposed to the bail-out package.
One of his first initiatives will be a new agency to monitor public accounts. This will be “completely independent of the government and parliament” and include at least two foreign experts. His finance minister will also be an independent with no party affiliations.
JOURNEY TO THE TOP
Born in 1964; son of a doctor. Childhood spent in former Portuguese colony of Angola.
Politics: Joined the Social Democrats aged 16. Has served as an MP and mayor. Became party leader in March 2010.
Education: Degree in economics.
Business experience: consultant, chief executive.
Family: Married to a physiotherapist from Guinea-Bissau, they have a four-year-old daughter. Has two daughters by his first wife.
Financial Times
Showing posts with label Bailout. Show all posts
Showing posts with label Bailout. Show all posts
5.09.2011
Wolfgang Münchau on Sócrates' Politics
Everyone outside sees it; now, everyone inside the country has to see it! Don't fool yourself! Não te deixes enganar! Não te deixes passar por parvo!
(...) The Greek government played it relatively straight but Portugal’s crisis management has been, and remains, appalling.
José Sócrates, prime minister, has chosen to delay applying for a financial rescue package until the last minute. His announcement last week was a tragi-comic highlight of the crisis. With the country on the brink of financial extinction, he gloated on national television that he had secured a better deal than Ireland and Greece. In addition, he claimed the agreement would not cause much pain. When the details emerged a few days later, we could see that none of this was true. The package contains savage spending cuts, freezes in public sector wages and pensions, tax rises and a forecast of two years’ deep recession.
You cannot run a monetary union with the likes of Mr Sócrates, or with finance ministers who spread rumours about a break-up. Europe’s political elites are afraid to tell a truth that economic historians have known forever: that a monetary union without a political union is simply not viable. This is not a debt crisis. This is a political crisis. The eurozone will soon face the choice between an unimaginable step forward to political union or an equally unimaginable step back. We know Mr Schäuble has contemplated, and rejected, the latter. We also know that he prefers the former. It is time to say so.
Full article here (you have to register or sign in to read the article).
(...) The Greek government played it relatively straight but Portugal’s crisis management has been, and remains, appalling.
José Sócrates, prime minister, has chosen to delay applying for a financial rescue package until the last minute. His announcement last week was a tragi-comic highlight of the crisis. With the country on the brink of financial extinction, he gloated on national television that he had secured a better deal than Ireland and Greece. In addition, he claimed the agreement would not cause much pain. When the details emerged a few days later, we could see that none of this was true. The package contains savage spending cuts, freezes in public sector wages and pensions, tax rises and a forecast of two years’ deep recession.
You cannot run a monetary union with the likes of Mr Sócrates, or with finance ministers who spread rumours about a break-up. Europe’s political elites are afraid to tell a truth that economic historians have known forever: that a monetary union without a political union is simply not viable. This is not a debt crisis. This is a political crisis. The eurozone will soon face the choice between an unimaginable step forward to political union or an equally unimaginable step back. We know Mr Schäuble has contemplated, and rejected, the latter. We also know that he prefers the former. It is time to say so.
Full article here (you have to register or sign in to read the article).
5.08.2011
What Portuguese should know about Finland
Following the video with the title What Finland and the rest of the world needs to know about Portugal that was made in the name of Portuguese people to the Finnish (see here), some guys in Finland answered with What Portuguese should know about Finland.
5.04.2011
Sócrates, o plano da troika e o meu futuro
Depois de ouvir a apresentaçao do PM demissionário resolvi tomar as seguintes decisões:
- vou comprar um carro novo;
- vou comprar roupa nova;
- vou marcar umas férias de 1 mês para os EUA;
- vou jantar fora hoje, amanhã e depois.
...ou não.
Todos nós sabemos que o lado brilhante da lua esconde um lado menos iluminado. Hoje e amanhã iremos começar a conhecer o lado que menos interessa ao PM.
Mas, mais uma vez, Sócrates quis fazer o que melhor sabe: associar a valoração daquilo que é positivo à sua imagem, deixando o negativo para colar na fronte de outrém. Muita manipulação quando haveria de existir muita responsabilidade.
O PM poderá renascer num país em que toda a gente é cega; num país de gente sábia definharia perante o escrutínio das suas políticas e das suas práticas.
- vou comprar um carro novo;
- vou comprar roupa nova;
- vou marcar umas férias de 1 mês para os EUA;
- vou jantar fora hoje, amanhã e depois.
...ou não.
Todos nós sabemos que o lado brilhante da lua esconde um lado menos iluminado. Hoje e amanhã iremos começar a conhecer o lado que menos interessa ao PM.
Mas, mais uma vez, Sócrates quis fazer o que melhor sabe: associar a valoração daquilo que é positivo à sua imagem, deixando o negativo para colar na fronte de outrém. Muita manipulação quando haveria de existir muita responsabilidade.
O PM poderá renascer num país em que toda a gente é cega; num país de gente sábia definharia perante o escrutínio das suas políticas e das suas práticas.
Portugal e o valor do bailout: mais 20 euros
No seguimento do texto que escrevi, deixo-vos com a análise de várias fontes, num trabalho feito por Neil Hume do Financial Times.
The relatively large size of the package is probably intended chiefly to generate a substantial buffer to ensure that programme can withstand potentially adverse developments.
Pois...
The relatively large size of the package is probably intended chiefly to generate a substantial buffer to ensure that programme can withstand potentially adverse developments.
Pois...
5.03.2011
Portugal, Irlanda, Governo Português e 20 euros
Conhecida a premissa do PM demissionário José Sócrates, Portugal estava a trilhar um caminho perfeitamente normal de consolidação das finanças públicas e o chumbo do PEC IV veio impedir que esse movimento continuasse.
Notícia de hoje: Valor total do apoio é de 78 mil milhões de euros
Bem, se estava tudo a correr bem (quem não se lembra do superavit?) porque motivo o estado Português precisará de um montantesuperior quase igual àquele que foi emprestado à Irlanda (85 mil milhões de euros), que teve um tsunami de perdas no seu sistema financeiro e uma bolha imobiliária enorme?
Portugal teve dois casos (BPN e BPP) de gravidade média no que se refere à injecção de capitais públicos para prevenir situações mais gravosas. Para além disso, quais foram os outros factos anormais?
Portanto, como é possível que o valor do financiamento a Portugal seja de 78 mil milhões de euros se estava tudo bem?
Vejamos alguns dados comparativos da Irlanda e Portugal para percebermos as características dos dois países (info) e as possíveis relações com a dimensão das suas economias:
Notícia de hoje: Valor total do apoio é de 78 mil milhões de euros
Bem, se estava tudo a correr bem (quem não se lembra do superavit?) porque motivo o estado Português precisará de um montante
Portugal teve dois casos (BPN e BPP) de gravidade média no que se refere à injecção de capitais públicos para prevenir situações mais gravosas. Para além disso, quais foram os outros factos anormais?
Portanto, como é possível que o valor do financiamento a Portugal seja de 78 mil milhões de euros se estava tudo bem?
Vejamos alguns dados comparativos da Irlanda e Portugal para percebermos as características dos dois países (info) e as possíveis relações com a dimensão das suas economias:
Irlanda
Força de trabalho: 2.15 milhões (2010)
PIB: 208.3 mil milhões de dólares (2010)
PIB per capita: 37600 dólares (2010)
Força de trabalho: 2.15 milhões (2010)
PIB: 208.3 mil milhões de dólares (2010)
PIB per capita: 37600 dólares (2010)
Portugal
Força de trabalho: 5.57 milhões (2010)
Força de trabalho: 5.57 milhões (2010)
PIB: 223.7 mil milhões de dólares (2010)
PIB per capita: 23000 dólares (2010)
Apesar da Irlanda ter menos de metade da força de trabalho de Portugal, apresenta um PIB apenas inferior em 15 mil milhões. O seu PIB per capita é, por isso, muito superior ao Português, em quase 14 mil $ por habitante.
Portanto, mais uma vez, se a Irlanda, assolada por perdas terríveis no sistema financeiro e uma bolha imobiliário, teve um financiamento de cerca de 85 mil milhões de euros, como é possível que o estado Português, que apenas teve dois casos relevantes e não teve nenhuma crise imobiliária, tenha que ser financiado com 78 mil milhões?
Isto, obviamente, no contexto da premissa do governo. Estava mesmo tudo bem?
Quem é que querem enganar? Mais importante, quem é que ainda se quer deixar enganar? Alguém?
Quem é que querem enganar? Mais importante, quem é que ainda se quer deixar enganar? Alguém?
Portugal must grow its way out of trouble by Pedro Passos Coelho
Para aqueles que não têm registo no FT, transcrevo para aqui o texto.
On June 5, Portugal holds parliamentary elections that will shape its future for years to come. If the country is to recover from its current financial crisis, these elections will have to return a government that can deliver reform and rebuild market confidence.
Recent events highlight just how crucial the need for change has become. On April 6, Portugal was forced to seek an estimated €80bn in financial aid from the European Union. This was the culmination of a long-term loss of market confidence in the government’s ability to improve external competitiveness, restore public and banking sector creditworthiness and get the economy growing again.
Turning this situation around is difficult but not impossible, if Portugal focuses its energy on growth. The country’s problems have built up over a number of years as it spent too much, and earned too little, running annual current account and budget deficits often close to 10 per cent of gross domestic product. The crucial difference with other eurozone countries is that macroeconomic imbalances were underpinned by a decade of meagre growth. The disappearance of private savings created a vicious circle between public and external debt.
Reducing costs through an austerity programme is urgently necessary. The most effective, and fairest, way to achieve this is through a leaner and more efficient public sector. Portugal needs to restructure general government, state-owned enterprises and public-private partnerships and concessions that do not provide value for money and are not economically productive. The three previous government austerity packages (not implemented as agreed) and the fourth (unanimously rejected by parliament) were focused too much on austerity for ordinary citizens, rather than reducing the size of the state.
Raising revenues is also critical, although only in the context of enabling growth. A simple example illustrates this point. Two weeks ago Portugal released first-quarter budget figures, which showed a narrowing deficit that was mostly due to earlier tax rises. Raising the tax take on the existing revenue base – rather than seeing tax income grow as a function of GDP growth – is not a sustainable strategy in the long term.
Which leads us back to growth. Fiscal consolidation, while necessary, is not enough to deliver long-term budget stability and debt reduction. In the medium to long term, economic growth is the only solution to Portugal’s fiscal problems.
The financial assistance package being negotiated with the EU, the International Monetary Fund and the European Central Bank is a vital, if depressing, step. Portugal’s cost of borrowing, which stood at over 8 per cent on five-year bonds the day before the vote on the latest austerity package, and has since risen to more than 11 per cent, was unsustainable. The assistance package is necessary to provide the liquidity the country needs to meet short-term funding requirements.
However, it is only a short-term measure that buys some time. The money is still owed, and must be paid back. This is why growth is all. It will be achieved by lowering costs in the short-run and bringing about productivity gains in the long-run; and it must be more export-driven. This means strengthening existing export markets and expanding to new ones, especially in Africa, Asia and Latin America.
The country needs a productivity boost from lower labour and other regulated costs, such as energy, that have a direct impact on the tradable sector; and structural reform has to lead to a more qualified labour force, greater accountability and effective conflict resolution.
Underlying all of this is the matter of transparency. Markets rely on confidence and certainty, and one reason investors have been pricing in a bail-out for Portugal since 2010 has been the lack of both in budget figures. These fears have been borne out with the budget deficit twice revised upwards in recent months.
The next government has to be committed to complete transparency on the real budgetary and contingent debt situation. This is essential to ensure effective fiscal consolidation and guarantee that Portugal will not remain reliant on financial assistance from abroad. The next prime minister will need to have the determination to bring about change and the willingness to reach out across ideological divides that will allow Portugal to deliver growth while honouring its international debt commitments.
Texto: Pedro Passos Coelho, líder do PSD
Jornal: Financial Times
02/05/2011
On June 5, Portugal holds parliamentary elections that will shape its future for years to come. If the country is to recover from its current financial crisis, these elections will have to return a government that can deliver reform and rebuild market confidence.
Recent events highlight just how crucial the need for change has become. On April 6, Portugal was forced to seek an estimated €80bn in financial aid from the European Union. This was the culmination of a long-term loss of market confidence in the government’s ability to improve external competitiveness, restore public and banking sector creditworthiness and get the economy growing again.
Turning this situation around is difficult but not impossible, if Portugal focuses its energy on growth. The country’s problems have built up over a number of years as it spent too much, and earned too little, running annual current account and budget deficits often close to 10 per cent of gross domestic product. The crucial difference with other eurozone countries is that macroeconomic imbalances were underpinned by a decade of meagre growth. The disappearance of private savings created a vicious circle between public and external debt.
Reducing costs through an austerity programme is urgently necessary. The most effective, and fairest, way to achieve this is through a leaner and more efficient public sector. Portugal needs to restructure general government, state-owned enterprises and public-private partnerships and concessions that do not provide value for money and are not economically productive. The three previous government austerity packages (not implemented as agreed) and the fourth (unanimously rejected by parliament) were focused too much on austerity for ordinary citizens, rather than reducing the size of the state.
Raising revenues is also critical, although only in the context of enabling growth. A simple example illustrates this point. Two weeks ago Portugal released first-quarter budget figures, which showed a narrowing deficit that was mostly due to earlier tax rises. Raising the tax take on the existing revenue base – rather than seeing tax income grow as a function of GDP growth – is not a sustainable strategy in the long term.
Which leads us back to growth. Fiscal consolidation, while necessary, is not enough to deliver long-term budget stability and debt reduction. In the medium to long term, economic growth is the only solution to Portugal’s fiscal problems.
The financial assistance package being negotiated with the EU, the International Monetary Fund and the European Central Bank is a vital, if depressing, step. Portugal’s cost of borrowing, which stood at over 8 per cent on five-year bonds the day before the vote on the latest austerity package, and has since risen to more than 11 per cent, was unsustainable. The assistance package is necessary to provide the liquidity the country needs to meet short-term funding requirements.
However, it is only a short-term measure that buys some time. The money is still owed, and must be paid back. This is why growth is all. It will be achieved by lowering costs in the short-run and bringing about productivity gains in the long-run; and it must be more export-driven. This means strengthening existing export markets and expanding to new ones, especially in Africa, Asia and Latin America.
The country needs a productivity boost from lower labour and other regulated costs, such as energy, that have a direct impact on the tradable sector; and structural reform has to lead to a more qualified labour force, greater accountability and effective conflict resolution.
Underlying all of this is the matter of transparency. Markets rely on confidence and certainty, and one reason investors have been pricing in a bail-out for Portugal since 2010 has been the lack of both in budget figures. These fears have been borne out with the budget deficit twice revised upwards in recent months.
The next government has to be committed to complete transparency on the real budgetary and contingent debt situation. This is essential to ensure effective fiscal consolidation and guarantee that Portugal will not remain reliant on financial assistance from abroad. The next prime minister will need to have the determination to bring about change and the willingness to reach out across ideological divides that will allow Portugal to deliver growth while honouring its international debt commitments.
Texto: Pedro Passos Coelho, líder do PSD
Jornal: Financial Times
02/05/2011
4.24.2011
O farol da tolerância de ponto e o horizonte negro da censura
No seguimento deste post, eis a confirmação de como alguns (os Outros...) nos vêem lá fora.
Portugal on holiday amid bail-out talks (é preciso fazer sign in para ler o artigo)
Não é preciso ser um génio para perceber que medidas aparentemente insignificantes (para o Governo) como a tolerância de ponto podem ter um impacto tremendo na imagem que os outros têm de Portugal. Vamos ser claros. No nosso dia a dia é muito fácil observarmos alguém e julgarmos que é preguiçoso, vive acima das suas possibilidades ou, por exemplo, quer trabalhar o menos possível. É muito fácil, portanto, criarmos uma primeira impressão negativa sobre um país mas mais relevante ainda é o conhecimento de que é muito fácil ficar com uma má impressão e extremamente difícil mudar essa consideração novamente para uma boa impressão. Está estudado. É básico.
Portanto, seria assim tão difícil perceber que todas medidas tomadas pelo Governo, por mais insignificantes que sejam, neste contexto específico, sejam alvo de escrutínio intenso? Não será fácil perceber que Portugal está dependente do dinheiro dos outros e que isso deve impedir todos os comportamentos laxistas?
E não venham cá com as tretas da soberania! Se a soberania é assim tão importante, então tivessem pensado nisso antes!
Portugal on holiday amid bail-out talks (é preciso fazer sign in para ler o artigo)
Não é preciso ser um génio para perceber que medidas aparentemente insignificantes (para o Governo) como a tolerância de ponto podem ter um impacto tremendo na imagem que os outros têm de Portugal. Vamos ser claros. No nosso dia a dia é muito fácil observarmos alguém e julgarmos que é preguiçoso, vive acima das suas possibilidades ou, por exemplo, quer trabalhar o menos possível. É muito fácil, portanto, criarmos uma primeira impressão negativa sobre um país mas mais relevante ainda é o conhecimento de que é muito fácil ficar com uma má impressão e extremamente difícil mudar essa consideração novamente para uma boa impressão. Está estudado. É básico.
Portanto, seria assim tão difícil perceber que todas medidas tomadas pelo Governo, por mais insignificantes que sejam, neste contexto específico, sejam alvo de escrutínio intenso? Não será fácil perceber que Portugal está dependente do dinheiro dos outros e que isso deve impedir todos os comportamentos laxistas?
E não venham cá com as tretas da soberania! Se a soberania é assim tão importante, então tivessem pensado nisso antes!
4.11.2011
A Irlanda mete água
..mas tanta, tanta, tanta água que nem os seus cidadãos (excepto empresas) pagam pelo serviço!
Sendo o sistema de saneamento e águas irlandês ainda completamente gratuito para os utilizadores não empresariais, é previsível que o corte seja feito em breve. Contudo, ainda não se verifica, de acordo com uma informação de um cidadão residente na Irlanda.
O governo acredita que conseguirá recuperar mil milhões de € com esta alteração. É caso para dizer que ainda há muito por onde cortar na Irlanda!
Sendo o sistema de saneamento e águas irlandês ainda completamente gratuito para os utilizadores não empresariais, é previsível que o corte seja feito em breve. Contudo, ainda não se verifica, de acordo com uma informação de um cidadão residente na Irlanda.
O governo acredita que conseguirá recuperar mil milhões de € com esta alteração. É caso para dizer que ainda há muito por onde cortar na Irlanda!
4.10.2011
Portugal's bailout
Fareed Zakaria interviews Martin Wolf
Portugal's bailout was expected, says Martin Wolf (FT) (35m33s)
But it's not even an issue. Note the importance that Mr Wolf gave to the fact. He's interested, like everybody else, in the financial situation of Spain and the implications that a bailout of this country would have to Europe.
Here.
Portugal's bailout was expected, says Martin Wolf (FT) (35m33s)
But it's not even an issue. Note the importance that Mr Wolf gave to the fact. He's interested, like everybody else, in the financial situation of Spain and the implications that a bailout of this country would have to Europe.
Here.
4.07.2011
The art that EFSF and IMF won't take
Not the beauty..
nor the poverty..
Pictures taken in Furadouro, Ovar, Portugal.
nor the poverty..
Pictures taken in Furadouro, Ovar, Portugal.
Subscribe to:
Posts (Atom)