Brussels, 28/06/2013 (Agence Europe) - The austerity and reform programme in Portugal, launched in return for its financial bailout, remains on track, said the European Commission on Wednesday in a new progress report, despite greater than expected economic problems. This is the seventh progress report on the aid package granted in May 2011 and is published ahead of a general strike in Portugal on 27 June. It states that programme application remains broadly on track against the backdrop of a difficult economic situation.
In the report, the Commission says that economic activity in the last quarter of 2012 was well down on forecasts, which had led to country's economic forecasts being revised down and the budget objectives being eased. The Commission is expecting the economy to start to pick up at the end of the year, leading to growth of around 0.4% in 2014. The Commission's predictions, however, suggest that unemployment will continue to rise and will hit the record high of 18.5% in 2014, with public debt reaching 124.2% of GDP.
The Commission points out that the country's banks and financial sector have picked up and are better able to cope with the recession, which will last longer than expected, and investor confidence has also picked up. The report notes the successful emission of a ten-year bond in May, the first ten-year bond since the aid package was requested. The European Commission calls in this report for the various political parties in the country to unite in support of the adjustment programme, although criticism of the programme is building, even in the EPP group at the European Parliament. Several parliamentarians at an EPP summer university in Porto slammed the programme for its negative impact on families and young people, said MEP Nuno Melo. He said mistakes had been noted and admitted, but all one ever hears is that more and more austerity is needed and, despite all Portugal's efforts, the troika perspectives are always negative. Rui Rio, the Mayor of Porto, said the structural adjustment programme had simply been badly designed in a hurry, in total ignorance of the situation in the country. On Thursday, Portugal had its fourth mass general strike in two years. Trains and underground services were at a standstill, public offices were shut and air transport severely disrupted. The strike was called by the trade unions in protest against measures demanded by the country's lenders. (SP/transl.fl)