As a result of the restructuring of Greece’s public debt, the IMF has defined a new “zone of elevated risk” which includes Portugal.
The risk zone for debt sustainability has been pegged at between 15-20% of GDP. In its last analysis, the IMF estimated that to face up to its deficit, Portugal would need to guarantee an annual finance to markets of between 17- 21% of GDP.
The news will serve as yet another bitter pill to powermakers doing everything they can to show Portugal is one of Europe’s success stories. It came days after economist João Ferreira do Amaral went on air to say not only that Europe was “making a big mistake” with its management of the Greek debt crisis, but that Portugal was almost certainly the next country to flounder.
Speaking on TVI24’s Olhos nos Olhos programme, Amaral explained why he believes neither Greece nor Portugal have the “conditions to remain in the single currency”.
“Quite apart from losing demographic sustainability, we are apparently the country with the highest level of emigration behind Malta,” he said. “As we already have a very old population, this will strongly contribute to a much more rapidly ageing population, and then it will not simply be a question of social security but society as a whole will start to have serious dysfunctions.”
Amaral’s bleak forecast is nothing new, but this far Europe’s leaders have shown themselves unwilling to listen despite the realities of the Greek crisis.
As the Resident went to press on Wednesday, news from the trouble-torn Mediterranean country was that Greek PM Alexis Tsipras’ faced rebellion from within the ranks of his anti-austerity Syriza party ahead of a crucial vote on reforms that has to be passed if talks can start on the new €86 billion bailout.
