Brussels, 04/06/2012 (Agence Europe) - Portugal has passed the fact-finder tests carried out by the international lenders' troika (European Commission, ECB and IMF) from 22 May to 4 June 2012. The troika announced on Monday 4 June, in a joint statement, that the €78 billion bailout package announced in May 2011, conditional upon structural reforms, is on track, but challenges remain, particularly the hike in unemployment. The fact-finders' assessment paves the way for the fifth instalment of aid, €4.4bn (€2.7bn from the EU and €1.4bn from the IMF). The next fact-finding mission will be in September 2012.
Portugal's international lenders say the country is introducing the reforms as planned and is determined to see them through. One positive sign is the fact that the recession is not as acute as expected, the economy contracting by 3% rather than the forecast 3.25%. Imports have been better than expected, but domestic demand remains weak. The lenders still believe that Portugal will meet its deficit reduction targets (4.5% of GDP in 2012), but say that continuation of problems elsewhere in the eurozone might have a negative impact on Portugal.
The troika says the government has made progress in reinforcing the banks and introducing reforms to encourage long-term growth, but important work is still needed to tackle unemployment.
The Portuguese finance minister, Vitor Gaspar, said on Monday that according to the international institutional assessment, Portugal is respecting the economic recovery programme.
The Portuguese government is planning to give private banks BCP and BPI and state bank CGD some €6.65 billion to help them meet the bank funding requirements laid down by the European Banking Authority, announced the finance ministry on Monday, saying that in total, more than €6.6bn of taxpayers' money will be injected into the banks, some €5bn from the €12bn earmarked for bank recapitalisation under the €78bn Portuguese bailout. The state aid will help the banks meet and even exceed by the end of June the capital requirements laid down by the EBA.
Rising unemployment. The Portuguese government last week raised its unemployment forecasts to 16% in 2013 from the previous 14.1%. At a press conference, Gaspar said that unemployment will hit 15.5% of the working population in 2012, up from 14% in 2011, reaching a peak of 16% in 2013. The EU's statistical office, Eurostat, says unemployment will reach 15.2% of the Portuguese working population in April 2012, compared with 15.1% in March. The minister hoped that the current reforms of structural unemployment would lead to a rise in employment levels after 2013. (SP/transl.fl)