Portugal to exit ‘excessive deficit’ programme this year, says Finance minister

It’s potentially great news – tainted only by the fact that very few people believe anything he says at the moment.

Finance minister Mário Centeno is weathering a major political storm over his dealings with the failed administration of State bank CGD (click here). There are even calls for his resignation.

But as Centeno continues to insist Opposition MPs are waging a “vile campaign of assassination”, he has broken from the controversy to say the country is headed out of Brussels’ “excessive deficit” stigma “even this year”.

Perhaps the best news is that EU moneymen actually agree with him – saying their projections for Portugal are now in line of those of the government (previously, they always criticised the government for being too optimistic).

Opposition PSD MPs of course do not see things quite the same way: pointing to a distinct massaging of accounts behind Portugal’s suddenly healthier balance-sheet performance.

Centeno has luck on his side. President of the Republic Marcelo Rebelo de Sousa has been singing the government’s praises, announcing that results for the left-wing alliance this far have “exceeded all expectations”.

Rádio Renascença puts perspective on the rose-tinted picture: in their winter report, the European Commission stresses that the 2.3% deficit for 2016 was only possible due to extraordinary measures, “like the fiscal pardon and reduction in public investment”, says the station.

Brussels is “more optimistic” it concedes, but not so optimistic that it is blind to the potential problems posed by a frighteningly snarled-up banking sector.

Thus, the station puts the news this way: “The eventual closing of (Portugal’s) excessive deficit procedure will only be decided at a more advanced phase of the so-called “European term – the economic cycle of coordination of EU economic policies”.

In other words, today’s provisions “constitute an important step” and suggest the Portuguese economy is at last on a “sustainable trajectory” – but it is still not yet the moment for celebration fireworks.

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