While doubts concerning the need for a second bailout continue to hang over Portugal, the country’s 7.1% public deficit of GDP (gross domestic product) registered during the first half of the year is still some way off the 5.5% deficit target set by troika for 2013.
According to the National Statistics Institute (INE), the budget deficit hit €5.7 billion between January and June of 2013, a value of 0.7 percentage points below last year’s result during the same period.
The INE revealed that the results were likely due to a combination of higher tax revenue and lower public expenditure.
However, Portugal’s total debt increased to 127.8% of GDP this year, well over the 122.3% forecast by the government and the 123% and 122.9% predictions of the European Commission (EC) and the International Monetary Fund (IMF), respectively.
In a press release published shortly after these numbers were revealed, the Ministry of Finance stressed that the new forecasts confirm that Portugal will be fulfilling its adjustment programme and that it will not have a mid or long-term effect on the sustainability of the Portuguese public debt.
Despite fears that Portugal faces an inevitable second bailout, fed by reports in the national and international press which say that the total sum of this financial aid could amount to €53.1 billion, the Portuguese government and the EU are taking similar stances concerning the subject, refusing the idea that the country will need a second loan.
Portuguese Economy Minister António Pires de Lima recently said that the Portuguese economy, government and families are working to avoid a second bailout and reiterated his commitment to completing the adjustment programme within the scheduled time.
“No, no and no,” he answered when asked about the existence of negotiations concerning a second bailout, adding: “The efforts of the Portuguese people cannot be in vain when we are already so close.”
Pires de Lima stated that he had no doubt that Portugal would be fulfilling its obligations to its international creditors and end the adjustment plan during the coming year, and that Portuguese companies are more competitive, the economy is growing and the government is doing everything it can to earn back its sovereignty.
“Portuguese companies have completed their adjustment and are an example of what needs to be done in the government,” the minister said, adding that if the government reduces its weight on the economy, then the fiscal burden on companies and families may drop, as well.
“It may take time, but we’ll get there,” he concluded.
A second bailout was also firmly denied by the European Commission (EC) through its spokesperson for economic and monetary affairs, Simon O’Neill, who said that a new adjustment programme is not being discussed “partially or in any other way”.
In reaction to a report by the Público newspaper, which suggested that Brussels was working on a new bailout, the spokesperson told news agency Lusa that the information was “totally incorrect” and did not match the commission’s point of view. The speaker added that the EC is focused solely on the success of the current adjustment plan.
Now, the country awaits the end of the Troika’s visit to obtain more definite feedback on its economic and financial performance so far.
