Brussels, 03/03/2014 (Agence Europe) - Portugal's economy is picking up and should achieve the target of reducing the public deficit to 4% of GDP this year. The positive assessment was issued on Friday 28 February by the country's lenders (the troika - the European Commission, the European Central Bank and the International Monetary Fund) after their eleventh monitoring mission. The troika has given the go-ahead for the disbursement of the next batch of aid to Portugal, €2.5 billion, as part of the €78 billion bailout negotiated in 2011. The positive assessment comes as the country approaches the end of its aid programme at the end of May and fully returns to the money markets.
In the report, the troika says that Portugal's “economic recovery is strengthening. Led by investment and exports, economic growth is somewhat ahead of projections, employment is increasing, and the unemployment rate is continuing to decline from very high levels. GDP is now expected to rise by 1.2 percent in 2014 - an upward revision of 0.4 percentage points - while unemployment is projected to decline to 15.7 percent - a downward revision of 1.1 percentage points.”
The troika explains that the fiscal targets have not changed: “The 2013 budget deficit is estimated at 4.5 percent of GDP (excluding the recapitalisation of Banif), well below earlier projections. This outcome reflects better revenue performance, including collections from the one-off tax and social security debt recovery scheme, and prudent expenditure control.”
The troika says: “Public debt remains high (129% of GDP at the end of 2013, Ed.) but is sustainable provided the reform momentum is maintained beyond the programme horizon. Reaching a broad political understanding that fiscal discipline and structural reform efforts have to continue to underpin Portugal's future policies would certainly constitute an important anchor for restoring full and sustainable market financing. Provided the authorities persevere with steadfast programme implementation, euro area member states have declared they stand ready to support Portugal until full market access is regained.'
The troika arrived in Portugal on 20 February to examine the austerity measures set out in the 2014 budget, including new cuts in pensions and increases in sickness benefit contributions for civil servants. The left-wing opposition warned on Friday that if the Portuguese president, Anibal Cavaco Silva, decided to endorse the amending budget that contains these controversial measures, then they will appeal to the country's constitutional court. (SP)