New austerity measures proposed.
from Revolting Europe
The scathing criticism comes as auditors for the European Commission, the European Central Bank and IMF, known as the troika, arrive in Lisbon to see if the country can meet the requirements of rescue ten days after the constitutional court struck down several austerity measures.
The Council of Public Finances (CPF), a state body that assesses budgetary policies, today deplored the “blind cuts” to public spending, accusing the government of slashing state budgets “without any great discernment.”
The scathing criticism comes as auditors for the European Commission, the European Central Bank and IMF, known as the troika, arrive in Lisbon to see if the country can meet the requirements of ‘rescue’ ten days after the constitutional court struck down several austerity measures.
The CPF, a public body established in 2001, is mandated to independently evaluate the performance and sustainability of Portuguese fiscal policy, to promote transparency and strengthen the credibility of public finances.
The sharp criticism of the cuts, applied by Portugal's right-wing coalition government at the behest of the troika, were echoed by another public body.
Self-defeating debt interest payments
The Economic and Social Council (CES), composed of representatives from the government, employers, trade unions and civic organizations, recommended cuts be softened and interest paid on international loans be renegotiated, as the Portuguese opposition has argued.
The CES fears any cuts to the public deficit from spending cuts will be overwhelmed by the interest payments on the €78 billion international aid package granted to Portugal in May 2011, helping to push public debt in a few years time to reach 120 percent of GDP, driven, in part, by the interests of the rescue.
Portugal’s international creditors started Monday to study new austerity measures proposed by the government to meet its deficit reduction commitments after the constitutional court’s decision to throw out several austerity measures contained in the 2013 budget that deprived the government of around 1.3 billion euros in savings, or about 0.8 percent of gross domestic product (GDP).
New round of cuts planned
After the court’s decision, right wing Prime Minister Pedro Passos Coelho vowed not to abandon austerity while pledging to reduce public spending by around 1.2 billion euros this year. Passos Coelho plans to cut ministry operating budgets by 600 million euros and to slash spending for health, education, social security and state controlled enterprises by a similar figure. In a letter to the troika before its visit, a fresh attack on wages and pensions was also outlined.
At the end of its last quarterly review in late March, Portugal was tasked with presenting a new plan for cutting public expenditures by four billion euros by 2015.
Approval of the new measures by the troika is the condition for the disbursement of the next instalment of two billion euros under the bailout. The definitive agreement by the Eurogroup of eurozone finance ministers for a seven-year extension to reimburse the loans granted to Portugal also depends on it.
Anti-austerity protests
On Saturday thousands marched in Lisbon, capping a week of protests against austerity measures, poverty and rapidly rising unemployment.
“Unemployment in Portugal is a national disgrace” and “a minimum wage increase is a necessity,” protesters chanted. They also called for the resignation of the government.
Portugal is grappling with its worst recession since the 1970s. The country is bracing for a record 18.2 percent jobless rate this year, up from last year’s 16.9 percent .
Reference
El Publico
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