It is proving to be another interesting week in politics. This morning the Bank of Portugal announced that national debt skyrocketed by a further 1.13 billion euros from August, bringing it by the end of September to “very much above” 130% of GDP.
Illustrating the story with an image of Finance minister Mário Centeno looking flummoxed, noticiasaominuto explained that the government has been aiming for a debt ratio of 129.7% this year, to reduce even further by 2017.
Thus this is “terrible news” – seemingly enforcing the criticism by German Finance Minister Wolfgang Schauble last month (click here), for which he was accused of behaving like a pyromaniac “who likes to present himself as a firefighter”.
But clearly unaware of the Bank of Portugal’s looming bombshell, European commissioner for economic affairs Pierre Moscovici has been widely quoted as saying he sees nothing wrong with the Portuguese economy.
Talking in Brussels on Friday, he was quoted as “disagreeing with Schauble” and viewing the overall situation in Portugal as “much stronger”.
“I don’t want to get into politics”, he told reporters. “Wolfgang Schauble is conservative, António Costa is socialist and I am a social democrat, but I am here as a commissioner, and what I can say is that the results today show me that independent of the government in power, the results are good – probably better today than yesterday”.
The statement didn’t take into account ‘tomorrow’, though Moscovici stressed that “certainly what is being done today is not prejudicial to Portuguese growth”.
“We are positively surprised”, he added. “The numbers that we are hearing are better than those we predicted, and this shows the Portuguese economy is on a good, resilient path and is making progress”, which is all “good news” for the government, the European Commission and Portuguese people in general, he said.
Quite what Moscovici will make of the Bank of Portugal’s latest announcement remains to be seen.