FORMER PSD Finance Minister, Manuela Ferreira Leite, has criticised the current Finance Minister, Fernando Teixeira dos Santos, for not coming clean about the real state of the government’s finances.
Ferreira Leite, who served under José Manuel Durão Barroso and was widely dubbed as Portugal’s ‘Iron Lady’, slammed the PS for not doing enough to reduce the government’s continued public spending and balance of payments debt.
Reacting to recent damning reports by the International Monetary Fund, the Organisation for Economic Development and Co-operation (OEDC) and the Bank of Portugal, the ex-minister and economist roasted her colleague for not coming clean in his report to Brussels about the success of his so-called austerity measures to put public finances in order.
Portugal’s current public deficit (the amount the government is spending on running the country and its public administration) currently stands at nearly seven per cent of her Gross National Product. Under EU regulations, it should be under three per cent and the government has pledged it will bring them to around 1.5 per cent by 2008.
“When the PS government took power in April 2005, it should have put in place an extremely strict budgetary policy,” she said in an interview to Radio Renascença last week. “If he had disagreed with the budget set out by Bagão Félix (during the government of Santana Lopes), he has had more than enough time to turn the situation around and instead he has done exactly the opposite.
“If the minister would care to tell the truth to the Portuguese, he would have to say that the plan that he presented to Brussels to reduce public spending is not possible because he would have to raise taxes so much that it would just not be feasible.
“It isn’t viable to think that taxes can be increased and that alone will solve the problem,” said the economist, who added that “only a concerted and combined effort would allow for a decrease in public spending (meaning extensive economic and administrative reforms) and until then the country will not grow”.
Despite the outlook, Teixeira dos Santos said last week that everything that could be done would be done in order that the public deficit would fall by 4.6 per cent.
She also didn’t spare the horses when it came to the outlook presented by Bank of Portugal governor Vítor Constâncio, saying that public spending would reach a ridiculously high level. With this she meant that the deficit was already running at 6.8 per cent and that the Bank of Portugal’s estimates that the economy was showing signs of improving were way off the mark, reminding the public that the Portuguese economy would still grow at a lesser rate than the other EU countries even if it did show improved growth of 0.5 per cent in relation to last year.
