Brussels, 09/04/2013 (Agence Europe) - Four days after the constitutional court in Portugal ruled that some of the measures in the country's budget for 2013 were illegal, Portuguese Finance Minster Vitor Gaspar said the government had decided on Tuesday 9 April 2013 to freeze non-essential public spending. The decision was taken to make up in part for the lost savings arising from Friday'scourt ruling, rendering illegal the scrapping of civil servants' and pensioners' 14th month bonus and the reductions in unemployment and sickness benefit, leaving a €1.3 billion public spending hole to fill.
The freezing of expenditure should give the government time to find alternative measures, demanded as a matter of urgency by the troika of lenders (European Commission, European Central Bank and International Monetary Fund) which would ideally like to discuss them at the EU finance ministers' meeting in Dublin on Friday. A Commission source said it was important for Portugal to unveil its new measures as soon as possible and for the troika to examine them speedily. The Portuguese government has not indicated when the new measures will be ready, but the source said the ministers in Dublin expected Gaspar to tell them what he was planning.
Once the new measures have been unveiled, a new troika fact-finding mission may be sent to Lisbon, but on Tuesday, Simon O'Connor, a spokesman for Euro Commissioner Olli Rehn, said that no trips had yet been decided. The next regular inspection, the 8th since the bailout began in May 2011, is scheduled for May. Payment of the next batch of aid, some €2 billion, hangs on the new measures and also on finance ministers' decision whether to give Portugal longer to pay back its loans, something that is on the agenda and will be discussed in Dublin, although no formal decision is expected on Friday (an informal go-ahead might be possible, however).
The Commission backs the idea of giving Portugal longer to pay back its loans, as Commission President José Manuel Barroso pointed out on Monday, saying it would be good if ministers could agree on the matter as soon as possible. Extra time would make it easier for Portugal to return to the markets and would give the country's structural adjustment programme greater credibility, says Barroso, adding that Portugal has made “remarkable efforts”. (SP/transl.fl)