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The Government of Portugal: “The ruling of the Constitutional puts the negotiation of the debt at risk”

The Government of Portugal: “The ruling of the Constitutional puts the negotiation of the debt at risk”

  • The Portuguese Government has met for more than three hours to analyze the ruling of the Constitutional Court, which overturns several measures to cut citizens.
  • Now he is obliged to look for other ways to meet the goals of the public deficit.
  • Before the meeting, the Government already warned that the sentence will bring “consequences”.
Pedro Passos Coelho

The Portuguese Prime Minister, Pedro Passos Coelho. EFE

The Portuguese Government warned on Saturday that the decision of the Portuguese Constitutional Court to annul several of the adjustment measures approved in its Budgets for 2013 places the country at risk in the renegotiation of the terms of the debt and put in its “external credibility” “

The cuts that knocked down the Constitutional one supposed a saving for the Government of about one billion Euros After a meeting of the Council of Ministers that lasted more than three hours, the Secretary of State Luís Marques Guedes, announced in a declaration without right to questions that the Executive does not agree, but “obeys” the decision of the Constitutional, although he stressed that it will have negative consequences.

The Executive spokesman stressed that, in addition to the effects on the budgets of 2013 – in which it amounts to a billion euros – the ruling questions the credibility “conquered by the effort of the Portuguese” before its international partners and creditors.


In his opinion, the ruling is detrimental to Portugal’s efforts to achieve at the meeting that the European Finance and Economy ministers celebrate the support of their partners next week in Dublin to extend the term of the loans granted to the country, something for which the government “has fought so hard”.

That postponement, Marques Guedes said, is “essential” in Portugal’s strategy to successfully close the financial assistance program in 2014, as planned in the financial rescue that the country requested two years ago today.

The Secretary of State also argued that the Constitutional Court “did not take into account the effort made by the Government to make the contribution of workers in the public and private sectors more equitable.”

Meeting with Cavaco Silva

The Portuguese head of state, Anibal Cavaco Silva, said that the government “has conditions to fulfill its mandate” after a meeting with the Prime Minister, Pedro Passos Coelho, who he asked urgently.

Passos Coelho requested the hearing to obtain “a quick clarification of the State on the relevant aspects of the sentence” and the president issued a brief statement in which he expressed his commitment to Portugal “honoring its international commitments.”

Obliged to look for other alternatives

The decision of the Luso Constitutional Court puts the government of Pedro Passos Coelho in a serious hurry , which must seek new alternatives for saving.

On May 16, 2011, Portugal, in exchange for a hard cut plan, received a financial aid of 78,000 million euros -52,000 million contributed by the EU and the other 26,000 million by the International Monetary Fund, IMF- in a series of stretches until 2014.

The rescue also included a game of 12,000 million euros destined to face “possible needs of capitalization” of the bank, which ultimately received such aid in December. In exchange for the bailout, Portugal was required a tough program of fiscal adjustment , structural reforms and maintenance of financial solvency.

Thus, the Portuguese Executive approved the privatization of companies and public services, the freezing of salaries and pensions or the increase of taxes to reduce the deficit to 3% before 2014.

Ls negotiations with the troika

However, on March 15, the EU and the IMF granted Portugal more time to apply their adjustments, due to the deterioration of external conditions, and they gave it another year, until 2015, to achieve a position below 3%. public deficit, after the 6.4% with which it closed the year of 2012.

Within the adjustment measures, the Portuguese Government also approved a law to capitalize banks , increased contributions of workers to Social Security and reduced contributions from companies.

This ruling by the Portuguese High Court is the second to disqualify the Conservation Executive’s saving measures On June 4, 2012, the technicians of the Troika – the European Central Bank, the IMF and the European Commission – accepted the accounts of the country and ordered the disbursement of 4,100 million euros, that is, the fifth installment of the rescue agreed in May 2011 to save Portugal from bankruptcy.

Months later, on September 7, the Portuguese government presented a 7-point increase in the contribution of workers to Social Security and the drop in almost 6 of business quotas, but social pressure and discrepancies in the ruling coalition They forced him to back down.

Instead, the Budgets for 2013 – approved by the Parliament on November 27 – included a significant increase in the tax burden through income taxes.

Some of these measures have been declared unconstitutional and discriminatory in a ruling of the Constitutional Court, including the suspension of one of the two annual extra payments to officials and pensioners and the reduction of unemployment benefits (6%) and sickness (5%). .

This ruling by the Portuguese high court is the second to disqualify the conservative executive’s savings measures, since last July the judges considered discriminatory the suspension of extra payments to officials and pensioners and not the private sector, but did not prevent the measure will be applied that year due to the financial situation of the country.

In addition, this ruling was seen by the market as a threat to the credibility of the Portuguese finances and served as an excuse for the left to request the resignation of the head of the Government, who has seen how this week has also resigned his trusted Minister, Miguel Relvas.

Now, the Executive will be forced to look for other ways to meet the goals of the public deficit, which could rise close to one percentage point.

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