With the coalition government adamant that Portugal has enough financial reserves to cushion it against a Greek exit from the Eurozone, a group of the country’s top economists have suggested otherwise.
The group – hired by the opposition PS to help elaborate the party’s election manifesto, claims a Grexit could put Portugal’s “permanence” in the Eurozone at risk – and threaten the very existence of the euro “as we know it today”.
Put bluntly, if Greece falls, Portugal could go next, explains negociosonline, adding that economists hired by the PSD “did not take into account” a Grexit.
Speaking to the website’s paper Diário de Notícias, Pedro Reis, who coordinated the team of 20 economists, said it “would be difficult to quantify the effects”, but that even if it happened, “the Portuguese government has already done what it could to avoid contagion”.
The much-touted strategy of the “full coffers”, that finance minister Maria Luís Albuquerque talked about in March means that Portugal should only be subject to a “European risk”, writes negociosonline.
But economists led by Mário Centeno, who helped formulate the PS “Ten year plan for Portugal”, said a Grexit could cut Portugal’s proposed growth in GDP by as much as a third.
Indeed, Centeno explained that a Greek exit would “oblige” the PS to alter a number of election pledges – including the much-demanded repositioning of public sector worker salaries and the elimination of the unpopular IRS ‘extra tax”.
Cavaco adds his voice to assertions that Portugal can weather a Grexit
As Europe continues to hold its breath over Europe’s negotiations with Greece, Portugal’s President of the Republic Cavaco Silva has added his voice to assertions that Portugal could weather the worst case scenario.
“Portugal has financial reserves that would allow the country to hold out for various, various months”, he said yesterday, during a state tour of Romania.
Days before, Portugal’s PM Pedro Passos Coelho said much the same, intimating that the country had reserves to weather an eventual financial storm “until at least the end of the year”.
What has not helped the situation, Cavaco stressed, has been Greece’s lack of diplomacy.
“The three representatives of the troika convened at the highest level not long ago to present a proposal to the Greeks”, he said. “They received afterwards some insults… There are rules of diplomacy”.
As the crisis lurches towards a Greek default crunch-point accusations are indeed flying from all quarters, with news that Russia is ready to “consider providing financial support” for the beleaguered southern country and the IMF chief Christine Lagarde saying it is time for talks “with adults in the room”.
In UK, the Chancellor George Osborne has told reporters he is “ready for the worst”.