The possibility of a 0 per cent budget deficit in Portugal shines so “bright” that it looks like “hope” for Europe, such is the FT’s judgment on the “sound policies” of the present government in Lisbon (FT View, August 26). You should not be fooled twice. The FT once praised former prime minister José Sócrates in 2007, with his then minister of internal administration António Costa, for the low deficit, assuming “reforms” would be made. The reforms were eventually implemented after the 2011 bailout by the European troika.
Portuguese suffering was rewarded: economic indicators turned positive in 2015, vices seemed gone and reforms sustainable. Then came Mr Costa who, despite losing elections to the government which oversaw reforms, became prime minister by purging pro-reformists in his Socialist party. He brought to cabinet former colleagues of Mr Sócrates, who is facing charges of corruption but denies any wrongdoing, plus their spouses and children. Such clan politics undermined reforms, reverting to a business-as-usual environment, with troika reforms requiring qualifications and scrutiny in government appointments undermined. The unskilled posed as “industrial managers”. Incompetence shows; in 2017 the area burnt by forest fires was higher than that of the rest of Europe combined, and 114 people died.
The public debt — €252bn in May 2019, still the EU’s third worst despite tiny improvements if measured in percentage of GDP — and fiscal burden are at all-time highs, with taxes rising (from €39bn in 2015 to €44bn in 2018) faster than meagre salaries. Slovakians, Estonians and Lithuanians have higher purchasing power than the Portuguese since 2018, according to Eurostat, while Portugal is dropping, approaching the EU’s lowest. Projected growth in 2019 gross domestic product is 1.7 per cent. In 2018 growth was half that of some Balkans and Baltic nations. Portugal is Eurostat’s second least appealing country to immigrants, worse than Poland or Romania. High emigration masks unemployment.
Other than riding on the fading improvements, ECB debt, housing and tourism temporarily diverted from north Africa, the government has neither the vision nor reforms to avoid decline. Yet, some are tricked by the possibility of a 0 per cent deficit, fuelled by a net negative 1.2 per cent of GDP in public investment in 2016 (still the EU’s worst) according to the IMF, jeopardising long-term financing, the safety of infrastructure and public health. We, the industrious Portuguese people, demand accountability for illusionist politicians squandering our country.
At https://www.ft.com/ (Financial Times)