President blasts budget policy

President Jorge Sampaio has criticised the government’s use of one-off measures, such as the sale of state property, to ensure the nation’s public deficit stays within EU limits. “No one can expect that extraordinary measures which, by definition, cannot be repeated, can support a long-lasting and meaningful budget consolidation,” he said in a message sent to parliament. He added the government should not confuse “regular revenues with non-repeatable revenues” and called on the state to do more to fight tax evasion in order to shore up public coffers.

Portugal was the first country to break the eurozone’s three per cent public deficit limit, reporting a 4.1 per cent deficit in 2001. When they came to power in April 2002, Prime Minister Durão Barroso’s government immediately slashed spending and sold state property in one-off moves that cut the deficit to 2.7 per cent that year. The deficit remained at just below the three per cent limit in 2003, as forecast.

The 2004 budget estimates a public deficit of 2.8 per cent, with the government once again planning a number of one-off measures to achieve this target. These include the sale of state property, which is expected to put some one billion euros into state coffers in 2004. Despite Sampaio’s criticisms, ministers have defended the use of one-off measures, arguing that they are needed in the short-term because new government measures take time to come into effect.