Brussels, 28/02/2012 (Agence Europe) - Portugal's aid programme is on track and policies have mostly been implemented as planned, explained the troika fact-finders on Tuesday 28 February (the (EU, IMF and ECB) in a joint press release. Once approved by the eurozone finance ministers, the EU27 and the IMF, this positive report will allow the issuing of a new batch of aid to Portugal to the tune of €14.6 billion, probably in April, the lenders explain.
The troika fact-finders had been in Portugal since 15 February for their third fact-finding mission, looking at the reforms put in place in Portugal as a condition of the €78 billion aid package granted in May 2011, reforms including the restructuring of big public companies, changes to healthcare provision, education and the justice system. The government has already made a series of changes including privatisation, changes to labour law and cuts in pensions and civil servants' pay. In the 28 February press release, the troika experts point out that Portugal has been able to increase its credibility by making a hefty improvement to the budget last year and introducing a solid budget for 2012. They say there has been progress in boosting competitiveness and employment and helping companies find finance. The troika says that challenges remain because the economic forecasts for 2012 are worse than expected, with the economy expected to shrink by 3.25% rather than 3% as forecast in November. Moreover, the structural reforms have not yet borne fruit, but the budget reduction target for 2012 (4.5% of GDP) remains possible, explains the press release, as long as the risks to the economic perspectives do not manifest themselves.
In Lisbon on Tuesday, the Portuguese finance minister, Vitor Gaspar, welcomed the report, saying that after three successful fact-finding missions and four aid payments, Portugal had received from its international partners €48.8 billion, €4.3bn of which is earmarked for recapitalising Portuguese banks. He admitted that the structural adjustment process would be very painful for the country and great efforts would be required. He added that the recession was likely to grow worse in 2012.
Against the backdrop of the recession, which is worse than expected, the Portuguese opposition parties expressed public concern last week, saying that the country would require extra time to meet the objectives set by international lenders, like being able to roll over debt unaided on the markets in the second half of 2013. Some analysts suggest the country may need extra aid.
These ideas are regularly brushed off by the Portuguese government and on Tuesday, Gaspar said that the country was not asking for more time or money and the matter had not been discussed with the troika experts. On Tuesday 21 February, Commissioner Olli Rehn said that changes to the Portuguese programme were not under discussion and Portugal was not the same as Greece. Rehn welcomed the troika's report on Tuesday and Portugal's constant progress in restoring budget viability, gradually deleveraging the banking industry and introducing structural reforms to increase international competitiveness and encourage jobs and growth. He encouraged the Portuguese authorities to continue with their good work and deal with the remaining challenges with determination and extra effort, as required. (SP/transl.fl)