Thursday

21st Jun 2018

No second bail-out for Portugal, says PM

Portugal has announced it will not seek a second bail-out, the country's new conservative prime minister has declared.

“We will not ask for a new aid programme. Neither for more money, nor for more time,” conservative Prime Minister Pedro Passos Coelho told the country's parliament on Thursday (10 November) during the first round of debates on next year’s budget, a document that will include sweeping austerity measures demanded as part of the country’s current bail-out programme.

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  • Portugal says it needs no extra help (Photo: fnkftw)

The evening before in Lisbon, eurogroup chief Jean-Claude Juncker had said he was “very satisfied with the behaviour of [Portugal’s] government” and congratulated its “national consensus”, according to reports in the domestic press.

Even though the ruling centre-right coalition holds a comfortable majority in parliament, the opposition Socialist Party has said it would not vote against the new budget, but abstain instead.

“It will be a violent abstention, but also a constructive and positive abstention, which thinks in the first place about the people and does not turn its back on the country,” party leader António José Seguro said Sunday on national TV.

He did, however, demand a renegotiation of the terms of the current bail-out, given the rapidly deteriorating situation in the eurozone.

But Passos on Thursday re-iterated that austerity now is even more pressing. "Any relaxing of our public finances, being less robust, less credible will be another stone weighing on an already very fragile situation," he said.

Portugal last April agreed to an EU-IMF loan of €78 billion.

Officials from the so-called troika of the EU, the International Monetary Fund and the European Central Bank arrived in Lisbon on Monday for the evaluation of progress made in implementing the demanded austerity and to decide whether the third tranche of the loan should be dispersed – a development Juncker said he was “convinced” would happen.

Not everybody is as convinced, however, of the merits of the loan.

The Association of Portuguese Banks have written a letter to EU economic affairs commissioner Olli Rehn complaining about the rules attached to the money, such as limits to remuneration of managers.

The troika’s popularity sank further in the eyes of the domestic audience after it became known that Portugal will have to pay a total of €655 million in administrative fees over the full period of the programme, to be terminated in 2013.

The EFSF, for example, charges “operational costs” atop the interest rate it receives. “These include everything that has anything to do with back-office management,” Christof Roche, the fund’s press officer, told this website.

The European Commission, for its part, denies that it charges any such fees. “There are no administrative fees and there are no fees on technical assistance,” commission spokesperson Amadeu Altafaj-Tardio said on Thursday. The IMF was not available for comment at the time of publishing.

Ireland and Portugal get lower interest rates on bailouts

Ireland and Portugal on Thursday were given longer deadlines and interest rates to pay back their loans under their respective EU-IMF bailouts, but eurozone leaders made it clear that no private investors will be involved in their rescue, as it is the case with Greece.

Europe's central bank gives helping hand to Portugal

In a move similar to the Greek case, the European Central Bank on Thursday suspended a minimum rating requirement for Portuguese bonds after one of the major credit rating agencies earlier this week downgraded Portugal to 'junk status'.

Greek bailout exit takes shape

At a meeting next week, eurozone finance ministers and the IMF are expected to agree on new cash, debt relief measures, and a monitoring mechanism to ensure that Greece can live without international aid for the first time since 2010.

Opinion

Eurozone needs institutional reform

Both the examples of Greece and Italy test the limits of a system with inherent weaknesses that feeds internal gaps, strengthens deficits and debts in the European South, and surpluses in the European North respectively.

Opinion

Europe could lose out in North Korean bonanza

South Korean businesses including Hyundai and Samsung are already scoping investment opportunities. Will North Korea become a 'new Vietnam' opportunity - or more like Myanmar, where slow Brussels policy-making meant EU exporters lost out.

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