Good news at last

By Michael Bruxo [email protected]

Last year, at PSD’s annual ‘Pontal Party’ in Quarteira, Pedro Passos Coelho predicted that2013 would be a “turning point for Portugal’s economy”.

Now, a year later and at the same event, the Prime Minister, wearing his PSD political party hat, confidently proved his assessment after results from the National Statistics Institute (INE) indicating a 1.1% rise in the gross domestic product (GDP) were made public on August 14 and showed signs of Portugal escaping from the recession which had been “haunting” the country for the past years.

Passos Coelho saidhe believes the economy’s improvement was due mainly to two reasons: the capacity and persistence to stick to the path planned by the government and the sacrifices of the Portuguese people.

“We must acknowledge and praise the extraordinary effort that the Portuguese people have displayed,” he said, adding that “companies have had to be very persistent in their attempts to overcome the difficulties.”

Despite the hard times that are still ahead, the PSD leader said he believes that the government’s objective is close to being achieved. “We want to tell the Portuguese people that their sacrifices were worth it and were not in vain,” he stated.

In justification of the austerity measures put into effect as a result of the Troika’s demands, he said that the decisions that have been made were “not to win elections, nor to pay back those who voted for us. They were made to give our country a future”.

“It has been hard for everyone. But the most important thing we can do now is compliment the collective effort, which represents a new credibility for Portugal, and build confidence for those who are starting their lives in the country,” he said.

After stressing the economic achievements, the PSD leader brushed away any thoughts that it will be smooth sailing from now on for Portugal. He did not consider the road ahead to be “risk-free” and said it would be easier to just emphasise the positives but could not overlook the possible risks.

“No one can say the crisis is over,” he warned the audience at the Quarteira assembly.

If the European crisis continues, especially in the countries with which Portugal is more commercially involved, then it may negatively affect the country.

Another risk includes the government’s measures to reduce deficit with cuts in sectors such as education, social security, defence and homeland security. “Lowering our expenditure means making tough decisions,” he admitted.

Other possible risks include measures which were conducted or are planned but deemed unconstitutional; an inability on behalf of the banks to adapt to a new business network and concede necessary funding, and also social risks.

Coelho stressed that “ it is up to all of us – the government, political parties, institutions, Portuguese citizens, and pensioners -to avoid the realisation of these possible risks”.

“It is not just PSD’s or CDS-PP’s responsibility, it is truly a national effort,” he said.

The PM guaranteed that the government does not want to jeopardise the results that have already been achieved.

“We are sure that there is no one who is not fully aware of the consequences that any type of political crisis would have regarding the future of the country,” he said.

He ended his speech with a strong message of hope: “I wish everyone a year full of better news compared to the one which is ending. It was truly a terrible year.”

Fiery reactions

Pedro Passos Coelho’s speech sparked fiery reactions from the left-wing opposition parties CDU and BE, as well as the PS socialist party, which targeted his statement regarding the limitations imposed by the Portuguese Constitution.

“The prime minister insists on using blackmailing methods which pressure the Constitutional Court and reaffirm the current political leaders as members of an outlaw and unconstitutional government,” said the CDU leader, Jerónimo de Sousa, adding that a government that goes against the Constitution must be removed from power.

Catarina Martins, the head of BE, also reacted strongly and said: “Having a prime minister who promotes the Constitution as his enemy is an extremely serious situation in a democratic country like Portugal.”

A spokesman for PS accused the head of PSD of attempting to “pressure” the Constitutional Court. “He called the defence of constitutional rights ‘constitutional risks’, he classified the social tragedy the population is experiencing as a ‘social risk’ and he named his own government’s incompetence an ‘internal risk’,” claimed João Ribeiro.

Political commentator Marcelo Rebelo de Sousa also questioned why the prime minister considered the Constitutional Courts restrictions to be a “risk”.

“It can only be a risk for two reasons: either because the government believes its measures were unconstitutional and decided to take the risk, or because it believes the court is random or unpredictable in its deliberation,” he stated.

Signs of recovery

Besides the surprising 1.1% increase in the GDP compared to the first three months of the year, there are a number of other positive signs which are pointing to a slight recovery of the national economy.

On August 7 it was revealed that the estimated unemployment rate for the second half of the year was placed at 16.4% of the working-age population, 1.3 percentage points below the number registered in the first three months of the year.

The turning point is also justified by other factors such as the 4.2% increase in car sales, which in 2012 had seen its lowest mark in 27 years, during the first seven months of 2013.

Additionally, exports are on a rising trend. Results made public this week show positive performances above those expected in France and Germany, which hint at the beginning of the end of the eurozone crisis.

Potential risks

However, not everything is good news. The wounds caused by the recent political crisis are still fresh and are expected to affect the elaboration of the State Budget, which has caused considerable tension in the last two years.

Questions are also arising regarding the public deficit, and if the government, and especially Deputy-Prime Minister Paulo Portas, will be able to renegotiate the deficit limit from 4% to 5% imposed by the troika. And without the implementation of measures such as a tax (TSU) on pensioners, which was opposed by Portas, the public deficit would have to be revised upwards from 4% to 4.5%.

Other measures, such as the implementation of special mobility status in the public sector, as well as 40-hour-long weekly working schedules and the convergence of pensions from the State-run pension fund Caixa Geral de Aposentações into the normal regime, are also considered essential to be included in the final draft of the Budget.