By: CHRIS GRAEME
Good Governance, progress and maintaining the social contract are the government’s priorities for the Portuguese economy, said the Minister of Finance at the American Club last Wednesday.
Since coming to power, the government has had two key objectives, both of which are being achieved, said Fernando Teixeira dos Santos.
The first was to put the country’s public finances in order. By 2007, through a combination of good house-keeping and budgetary constraint, the public deficit had been brought to just under three per cent (2.7 per cent) in line with the European Union’s Growth and Stability Pact.
The second goal had seen an increase in sustained economic growth to 1.9 per cent in 2007 from a figure well below one per cent in recent years.
“Although we have seen a modest recovery in growth, we need to be more ambitious, despite the difficult world economic climate which has seen interest rates and inflation go up along with the price of raw materials and fuel,” he said.
Portugal had “resisted and reacted well” under difficult international economic circumstances with positive investment figures unlike previous years which had seen investment plummet into the negative. “This recovery in growth was thanks to Portuguese companies being more competitive and workers being more productive,” he explained.
Small and medium companies were developing new products and services, new markets were being conquered and companies had diversified both their goods and their strategic international targets.
“With the down town in the US economy and deceleration in Europe, we have to accept that uncertainties exist and view Portugal’s performance in that international context,” he stressed.
“I refuse, however, to put myself in the position of making sweeping predictions to say what will happen and would rather say let’s wait and see and then react,” warned the minister.
This did not mean that Portugal shouldn’t be “proactive” if she was to resist and minimise external impacts that could affect the Portuguese economy.
“We have to establish a culture of discipline and strictness in Portugal which is something we had not really done in this country in state finances for decades,” Francisco Teixeira dos Santos admitted. However, that was now changing, and discipline not only had to be within the government but also in private companies and in individual employee performance.
“Our companies and employees need to be more competent, more qualified, more modern and outward-looking, and wiser; our citizens need to be fully involved (in this process) at all levels,” he stressed.
Portugal’s external reputation was improving and she was gaining greater respect and credibility abroad among international organizations after years of disbelief and distrust.
“For years we were seen as incapable of change, but our street credibility has grown part in thanks to the Presidency of the European Union and reforms made in education, social security and health,” he said.
It was also important to try and give something back to the Portuguese with a planned reduction in value added tax (IVA) by one per cent to 20 per cent this year.
“We as a government have a GPS for Portugal, which is Good Governance, Private Initiative and Progress, and Solidarity and Justice for Society,” he concluded.
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