7th Jul 2022

Portuguese finance minister quits

Portugal’s finance minister and one of the chief architects behind its €78 billion bailout tendered a surprise resignation on Monday (1 July) in the face of widespread opposition to austerity-driven policies.

In his resignation letter to the prime minister, Vitor Gaspar says he lost the faith and support of the people to maintain a policy that has so far failed to curb rising unemployment and a deepening recession.

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

“It’s my firm conviction that my departure will contribute to reinforce the leadership and cohesion of the government team,” he wrote, reports Bloomberg.

Gaspar took office two years ago after working as a consultant to the Bank of Portugal from March 2010 to June 2011. He headed the European Commission's Bureau of Economic Policy Advisers between 2007 and 2010. He was also the director of economic research at the European Central Bank (ECB) between 1998 and 2004.

His professional experience was said to have earned him widespread respect among his eurozone peers.

But his critics at home blasted him for pushing through policies that have crippled the country and put tens of thousands of out work. The jobless rate in Portugal is around 18 percent.

The terms and conditions attached to the three-year €78 billion bailout agreement in 2011 required extensive cuts in social spending and tax hikes.

The commission gave Portugal an extra year in May to bring its deficits below the 3 percent limit in the bloc's Stability and Growth Pact. Its original 2013 target of 4.5 percent was eased to 5.5 percent.

Gaspar in his letter said missing the target in 2012 and asking for an extension in 2013 undermined his credibility as a finance minister. Portugal’s constitutional court had also scrapped some of his cost-cutting measures.

But leaving his post may ease the tensions among a fragile government coalition ahead of the September local elections, reports the Financial Times. The government says it is on track to exit the bailout due to expire in June 2014.

A review in March by the troika of international lenders, composed of officials from the Commission, the International Monetary Fund and the European Central Bank, said Portugal is in “the process for a full return to markets”.

Meanwhile, its economy is expected to shrink twice as much as anticipated earlier this year with debt forecasted to peak at 123.7 percent of GDP in 2014.

Further cuts announced by Prime Minister Pedro Passos Coelho in May to generate some €4.8 billion in savings by 2015 require laying off state workers.

Gaspar is to be replaced by Maria Luis Albuquerque, who is due to start her new position on Tuesday.

Rising prices expose lack of coherent EU response

The increasingly sharp debate over the rising cost of living exploded in European Parliament, with lawmakers from all stripes, liberal, left, green and conservative, calling on the EU to act.

News in Brief

  1. France to nationalise nuclear operator amid energy crisis
  2. Instant legal challenge after ok for 'green' gas and nuclear
  3. Alleged Copenhagen shooter tried calling helpline
  4. Socialist leader urges Czech PM to ratify Istanbul convention
  5. Scottish law chief casts doubt on referendum
  6. British PM faces mounting rebellion
  7. Russian military base near Finnish border emptied
  8. Euro slides to lowest level in two decades

Stakeholders' Highlights

  1. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  2. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  3. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  4. Council of the EUEU: new rules on corporate sustainability reporting
  5. Nordic Council of MinistersNordic ministers for culture: Protect Ukraine’s cultural heritage!
  6. Reuters InstituteDigital News Report 2022

Latest News

  1. Legal action looms after MEPs back 'green' nuclear and gas
  2. EU readies for 'complete Russian gas cut-off', von der Leyen says
  3. Rising prices expose lack of coherent EU response
  4. Keeping gas as 'green' in taxonomy vote only helps Russia
  5. 'War on Women' needs forceful response, not glib statements
  6. Greece defends disputed media and migration track record
  7. MEPs adopt new digital 'rule book', amid surveillance doubts
  8. 'World is watching', as MEPs vote on green finance rules

Join EUobserver

Support quality EU news

Join us