Our Plan to Fix Portugal
The main economic challenge is to ensure that growth goes hand in hand with fiscal discipline.
Last Wednesday, all the opposition parties in the Portuguese parliament unanimously rejected the Socialist-led government’s fourth round of austerity measures in just over a year.
My Social Democratic Party, the country’s main opposition party, has been and remains a staunch supporter of reducing Portugal’s public deficit to 4.6% of GDP in 2011 (from perhaps 7% last year) and to keep narrowing the budget gap to 3% of GDP in 2012 and to 2% of GDP in 2013.
These latest measures—the 2011-2014 Growth and Stability Program—were announced without prior domestic consultation, surprising everyone and effectively sidelining the head of state and Parliament as the minority government took on international obligations without ensuring parliamentary backing.
We voted against the latest announced austerity measures not because they went too far, but because they did not go far enough. They do not address the heart of Portugal’s main economic challenge, which is to ensure that growth goes hand in hand with fiscal discipline. In our view, the latest austerity package would not have fostered growth, while imposing unacceptable sacrifices on the most vulnerable members of society. It was too much tax and not enough cost reduction.
A broad coalition for change aligning politicians around the principles of discipline and competitiveness will help market confidence and help the political process itself.
I will not relent until I bring this coalition about.