Tuesday, June 28, 2011

Portugal up-beat over bailout

Portugal's new prime minister, Pedro Passos Coelho, has again expressed his willingness not only to fully abide by the terms of the EU/IMF €78 billion bailout, but go beyond them.

His government has just confirmed that it will be “more ambitious” than strictly required in cutting the country's budget deficit. Its stated intention is to exceed the bailout requirements under which Portugal must cut its budget deficit to 5.9% of gross domestic product this year from more than 9% in 2010.

The government, which only took office last week, has drawn up a four-year programme, but has not yet announced details. Among the most immediate measures will be selling state-owned assets, including the national airline TAP, reducing social security contributions made by companies, making it easier for employers to dismiss workers, and increasing value-added tax on certain products to as much as 25%.

Passos Coelho has said that he wants to go beyond the requirements of the bailout agreement to create “a wave of confidence in the markets.”

The four-year programme announced today will be elaborated upon and discussed in parliament on Thursday and Friday. Meanwhile, Passos Coelho is filling key posts with a surprisingly large number of independents rather than members of his own PSD party or that of his coalition partners, the CDS-PP. Four of his 11-member cabinet are independents. Of the 35 new secretaries of state who take up their posts today, 15 are independents. Only 12 are aligned to one or other of the coalition partners.

This is all in contrast to the confusion and tensions in Greece. While there is much public unease and union opposition in Portugal to the forthcoming austerity measures, there has been far less political wrangling and none of the street violence evident in Athens. Indeed as a measure of the prevailing mood, the hundreds of cyclists who took part in a 'Naked Bike Ride' in Lisbon, part of an international effort to promote environmental issues, abided by a police modesty order. The 'naked' bikers were less revealing than many ordinary holidaymakers on Algarve beaches.


  1. As a foreign observer may I say good on the Portuguese for keeping their cool in these very difficult times.

  2. You're a good old newspaper man Mr Port, selling dusty financial news by posting a picture of a semi-naked bicyclist. Old habits die hard eh?

    Th new Government measures have now been released, any comments to come from the 'Pen of Port'?

  3. You're right, Paul. I've just posted a new piece on this dismal debt crisis and didn't think it would be complete without a picture of a semi-naked alien.