Caption: Portuguese prime minister António Costa
Despite the benefit of the doubt displayed this week by President of the Republic Marcelo Rebelo de Sousa, the Bank of Portugal has poured cold water on the Socialist government’s State Budget growth forecasts.
Far from the 1.8% growth that Portugal’s political leaders are banking on for the country to move forwards, BdP has reviewed its opinion of just a few months ago (1.7%) to 1.5%.
What this means is that yet another financial ‘institution’ fails to be convinced by left-wingers’ convictions that putting more money in people’s pockets will stimulate the economy.
PSD MP Luís Campos Ferreira neatly packaged concerns in a leader article in Correio da Manhã today where he claims prime minister António Costa “believes the growth of this country is directly indexed to the effervescent self-satisfaction he has for his tactical abilities”.
Ferreira maps the strategy “based on virtuous scenarios and faith that simply everything will go well”, reminding readers that growth forecasts have been ‘revised downwards’ for months.
“From finance minister Mário Centeno’s much-lauded and now buried macroeconomic scenario where GDP growth was put at 2.4%”, to the 2.2% touted when the government reached office, the 2.1% in the draft budget document, and finally the 1.8% in the final proof.
“Now the central bank says growth should be 1.5%,” he continues – which is much the same as it was in 2015.
Given that ‘additional measures’ could be demanded within weeks by Brussels, the whole strategy could collapse.
“Without growth there is no creation of wealth” and without wealth, “there is no money to pay the bills”.
BdP’s pronouncements are based very much on the level of debt already carried by many families, explains Público, as well as the debts held by businesses.
Indeed, the bank regulator reiterates the cornerstones of Europe’s policies of austerity. For the economy to grow, Portugal needs “sustainability of public debt, adequate structural reforms and the development of human potential”, the paper concludes.
THE “POISONOUS GIFT OF CHEAP MONEY IN PORTUGAL”
BdP’s ‘bombshell’ comes as ECB president Mário Draghi is due to address the first Council of State under the new government and president next Thursday. And it comes as international broadcaster Deutsche Welle carries a damning article on the ‘trap’ Portugal’s leaders may be falling into.
That these ‘developments’ could all be being orchestrated from Brussels seems highly likely.
DW’s spread is based on what it calls the ECB’s “poisonous gift of cheap money” in the form of ‘ultra-low interest rates’.
But what is ‘interesting’ is that the article is penned by a Portuguese economist, João César dos Neves.
Neves warns that much of the ECB’s money could be “falling into the wrong hands”.
He says that “authorities at municipal and local level are increasingly founding private companies to tap commercial funding that is normally barred to treasurers under EU rules – a strategy that some have blamed for Portugal’s sovereign debt crisis in the past”.
He also claims the ECB is keeping banks that would have gone bust “a long time ago” “artificially alive”.
With the debate on Portugal’s State Budget now academic, the truth is no one seems to know where the country is headed.
But one aspect has been made clear this week: President Marcelo has given political leaders a year to show their policies can work, and PM Costa has decided not to change the Constitution so that he can get rid of BdP governor Carlos Costa.