Brussels, 15/03/2012 (Agence Europe) - On an official visit to Portugal, EU Euro Commissioner Olli Rehn said that implementation of the Portuguese austerity programme was progressing at a good speed but many challenges remain on the structural reform front, both domestically and abroad. He made his comments in an address to Portuguese parliamentarians on Thursday 15 March.
The commissioner said that the macroeconomic situation was difficult, and while the public spending cuts had started well, they needed to continue. It is difficult for Portuguese households and businesses to obtain loans, he added. The cornerstone of the country's austerity programme, explained Rehn, are the structural reforms that need to be pursued. A sign of the progress in making Portugal's labour market more flexible is the resistance from trade unions, with the country's biggest trade union, the CGTP, calling a general strike on 22 March.
The Portuguese economy shrank by 1.6% in 2011 and is expected to shrink still more in 2012 (by a predicted 3.3%). Lisbon has to reduce its public deficit to 4.5% of GDP this year and below the 3% cut-off point in 2013. At the end of February 2012, the troika of lenders (the European Commission, ECB and IMF) said that implementation of the Portuguese programme was on track, paving the way for the payment of a new instalment of aid (nearly €15bn - see EUROPE 10563).
On Wednesday 14 March, Olli Rehn said he wanted a clear distinction to be made between the Portuguese economy and that of Greece, another eurozone country in receipt of international aid. Rehn said Portugal was very different from Greece for several reasons. Firstly, the debt is far smaller as a proportion of the economy, and secondly, right from the start there has been strong political support for the programme across the board in Portugal. Rehn made his comments after talks with the Portuguese prime minister, Pedro Passos Coelho. In 2011, Portugal's debt stood at 100% of GDP, compared with Greece, where it stood at more than 160%. The partial write-down of the Greek debt is expected to reduce it to a more affordable 120%. (MB/transl.fl)