Portugal: Lisbon resilient, yields calmed, citizens exhausted

Portuguese PM cautiously claimed that the bulk of the adjustment is already done and “the mission is accomplished.” Furthermore, Mr. Coelho thanked the effort that Portuguese people made, and added that –like Ireland- they won’t sign up for any other aid mechanism because “the country has guaranteed funding for a whole year.”

However, it is not by chance that both the Portuguese PM and his government showed a rather gloomy face, as if they were attending a funeral. After all, everybody knows that now nor next May 17 are days to celebrate.

The announcement comes shortly before the European elections, but it seems difficult that it manages to reverse the difficult situation because of the minimal support among the Portuguese people -who are virtually unaffected by the arguments that the country is recovering the confidence of the markets.

Citizens have constantly showed their rejection of Passos Coelho’s measures both in the streets and in the polls, ever since the Troika appeared in the country. In this sense, the socialist opposition has managed to show that Mr. Coelho went beyond the demands of the Troika.

And he did. But in order to show results before the legislative elections of next year –which are the important ones. The truth is that, we complain about the measures carried out by Mariano Rajoy in Spain, but what happened in Portugal was far worse. The Portuguese government fired 30,000 officials, cut pensions by 10%, delayed the age of retirement to 66 years, reduced the compensation for loss of employment or established a 20 euros tax for medical urgencies, among other more drastic measures.

Results? Portugal managed to end 2013 with a deficit lower than the target: 4.9% versus 5.5%, also benefited from the lower economic recession and a 3.6% viable interest rate (far from 10.6% of April 2011).

The impact of the adjustment on the economy and on population was devastating. Unemployment rate, 7% in 2007, now exceeds 15%, which has sunk into poverty and depression some areas of the country. Many foreign people talk about “ghost cities.”

About the Author

The Corner
The Corner has a team of on-the-ground reporters in capital cities ranging from New York to Beijing. Their stories are edited by the teams at the Spanish magazine Consejeros (for members of companies’ boards of directors) and at the stock market news site Consenso Del Mercado (market consensus). They have worked in economics and communication for over 25 years.

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