Monday

30th Jan 2023

Portugal seeks court inquiry into 'unjust' debt deal

  • Debt deal "socially unsustainable" says Portuguese President (Photo: Pedro Ribeiro Simoes)

Portugal's President has called into question the viability of his country's austerity programme.

Cavaco Silva said in his New Year's speech this week that he would request an inquiry from the country's top court on whether planned spending cuts as well as a new supertax on pensions above €1,350 a month were constitutional.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

He said his country would "honour its international obligations," even though a negative court ruling could force the government to rewrite its 2013 budget.

He also said "there are well-founded doubts over whether the distribution of sacrifice [in the bialout terms] is just."

He blamed the bailout for creating a "recessionary cycle" and he dubbed the programme "socially unsustainable."

Portugal was forced to request an EU-International-Monetary-Fund (IMF) bailout worth €78 billion in May 2011 after seeing its credit rating cut to junk status and finding itself unable to finance its debt.

The country's debt, the third highest in the eurozone behind Greece and Italy, is expected to peak at 124 percent of GDP in 2013.

It has won praise for the implementation of its bailout terms and is expected to return to fully self-financing itself on the debt market in September 2013.

The yields on 10-year government bonds fell to 6.7 per cent earlier this week, well down from a high of 17% in January 2013.

However, with the country expected to stay in recession in 2013 for the third successive year, the country's unemployment rate has risen to 17 percent, with youth joblessness standing at just under 40 percent. Taxpayers are also set to feel further pain as the government bids to increase tax revenues by 30 percent.

The Portuguese courts have already ruled that several measures contained in the 2012 budget are unconstitutional.

Meanwhile, IMF managing director Christine Lagarde last week told German news weekly Die Welt that Portugal is in a group of countries that "can allow themselves to go a little more slowly ... in the push to straighten out their public finances."

Edward Gardner, the head of the IMF mission in Paris, also told reporters that slowing the pace of deficit reduction for a number of EU countries would be "more effective."

Ireland and Portugal set for debt deferral

Ireland and Portugal are to be given more time to repay their emergency loans with both countries seen as good pupils in following the imposed austerity programme.

Analysis

Why is petrostate UAE going all in on green hydrogen?

The United Arab Emirates announced its ambition to become one of the world's premier trading hubs for green hydrogen. Interesting, to say the least, for a country that relies on the sale of fossil fuels for its prosperity.

Latest News

  1. Pressure mounts on EU to coordinate visas for Russian rights-defenders
  2. Dutch set to agree to US-led chip controls to China
  3. No record of Latvian MEP's 'official' Azerbaijan trip
  4. Why the new ECHR Ukraine-Russia ruling matters
  5. Europe continues to finance Russia's war in Ukraine with lucrative fossil fuel trades
  6. Official: EU parliament's weak internal rule-making body leads to 'culture of impunity'
  7. Red tape border logjam for EU's 1.3m 'frontier workers'
  8. Greece's spy scandal must shake us out of complacency

Stakeholders' Highlights

  1. European Parliamentary Forum for Sexual & Reproductive Rights (EPF)Launch of the EPF Contraception Policy Atlas Europe 2023. 8th February. Register now.
  2. Europan Patent OfficeHydrogen patents for a clean energy future: A global trend analysis of innovation along hydrogen value chains
  3. Forum EuropeConnecting the World from the Skies calls for global cooperation in NTN rollout
  4. EFBWWCouncil issues disappointing position ignoring the threats posed by asbestos
  5. Nordic Council of MinistersLarge Nordic youth delegation at COP15 biodiversity summit in Montreal
  6. Nordic Council of MinistersCOP27: Food systems transformation for climate action

Join EUobserver

Support quality EU news

Join us