By: CHRIS GRAEME
THE PORTUGUESE have nothing to worry about when it comes to the state of the nation’s banks, said President Cavaco Silva last week.
“The banks are able to resist the crisis and the Portuguese can put their trust in their banking system,” the President told weekly newspaper Expresso.
“There are not, for the moment, solvency problems in the banks. The Bank of Portugal and Portuguese banks have all the necessary conditions to face any difficulty that could arise,” he said.
Cavaco Silva said he was, however, worried about the threat of increased unemployment as a result of the present world financial crisis and praised the decision by European leaders in helping to re-establish confidence in the financial market in guaranteeing thousands of millions of euros to unblock inter-bank credit and get banks lending to each other again.
“It was the right decision in that it allowed banks to get credit,” he said in the interview, adding that it was a “fundamental issue to avoid the scarcity of credit available to companies and families,” said the President.
“If this doesn’t happen, many companies will face difficulties and we could face a big increase in unemployment,” he added.
Prime Minister José Sócrates, however, said that the 20 billion euro guarantee that the state would give to the banking sector was to help companies and families and was not a blank cheque for bankers.
Speaking on Saturday at the opening of a PS Party rally in Loures, the Prime Minister said: “What we did was not to bail out the banks, it was to ensure there was liquidity in the banks to serve our economy and families,” he said “The lack of credit and liquidity that we are experiencing is putting company investment and family credit at risk.”
The law that was rushed through parliament two weeks ago permits the state to underwrite bank loans and credit. It was passed on Thursday, October 16, in the Assembleia da República with votes in favour from the PS, PSD, and CDS-PP, with votes against from the left-wing Bloco Esquerda, PCP communist party and the Verdes Party (Greens). The law was ratified the following day by the President of the Republic in record time, only half-an-hour after having been delivered to the Presidential Residence, the Palácio de Belém.
José Sócrates also said that the proposed State Budget for 2009 was not an electioneering stunt but rather a means of helping companies and families resist the effects of the international crisis.
Sócrates highlighted increases in family credit and tax breaks, credit for pregnant women, extra cash for the elderly and for school children from impoverished families. The Prime Minister also referred to increases in deductions for IRS Income Tax and for housing expenses.
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