Debt crisis

Who should be Portugal’s debt to pay?

Change in Lisbon: on another stubborn Save, the new government on more money for the citizens to the crisis to solve. The creditors see the development is rather critical.

In the coming years, from 2016 through 2019, must Portugal a total of around 43 billion euros of debt to repay – to the IMF, to Europe and to private creditors. Especially the fear for their money, but also the European Commission reported concerns. Portugal’s budget for 2016 is hard at the border. The country give dangerous a lot of money and run the risk, again by the stability Pact to hurt. So: Who should pay?

“I understand all the fuss”, wonder the Economics Professor José Maria Castro Caldas of the University of Coimbra. “These debts are paid, like any other debt hitherto, by new debts.” Portugal could have been the rescue package has left relatively cheap on international markets, money supply, short term even with Negative interest rates. It is expected in the near future, nothing will change. A kind of debt rescheduling was no Problem.

José Maria Castro Caldas, Economist of the University of Coimbra, says, the Save is gone.

End the politics of austerity?

For a debt reduction on the other hand, Castro Caldas no room. The government announced restoration of the purchasing power and the promised plug the largest holes in the social network were not. A change of policy find, instead, finally have the new socialist government to end the austerity promised. The called on the leftist parties, which the government in Parliament to support, now. Neither with the Communists nor with the populist leftist bloc is further austerity.

“We have still very many years to Save”, says in contrast, Aurora Teixeira from the University of Porto. Only thus could the country’s financial obligations. This also includes the repayment of almost seven billion Euro for government bonds this year. A Post that by 2019 dramatically to more than Double increase. “Doable,” says the Wirtschaftsprofessorin. Even air for a slight reduction in debt was in it. If the economy at home and especially in the partner countries grows, as expected. With very much discipline. But to have the government Yes explicitly known, therefore the same now social improvements through higher indirect taxes, for example, the gasoline and the banks. “It will take time, but Portugal can and will pay his debts and is to the stability Pact.”

The Wirtschaftsprofessorin Aurora Teixeira from Porto warns that Portugal will still be a long time to save.

More growth through more money

A solution with Europe, not against Europe if he wanted to for his country, assured Portugal’s Prime Minister, Jorge Costa, meanwhile, again and again. Save only for the sake of saving should not, however, belong to. So he has his Parliament and to the EU’s budget is submitted to be very generous with growth and government revenues deals. The partial withdrawal of wage and pension cuts should be money in the economy pumping. Only after repeated Repair, i.e. tax increases, gave Brussels the green light. Under the Proviso, in the spring, if necessary, to take corrective action. Promptly, the markets were nervous. And even more nervous, because the government of the 35-hour week in civil service re-introduces and the minimum wage by 2019 at 600 Euro wants to raise.

“If in a country which Left to the government to respond, the creditor always disturbed,” notes João Duque, with a smile. Finally, should this government Yes your clientele operate. In the case of Portugal and because it’s a minority government – even the clientele of the Communists and of the left block. He can see still no reason for concern. Portugal was permitted to not only the trust of the creditor in jeopardy. The attempt to get more growth by spending more money to create, was legitimate, the games room in the budget large enough, the insured, a Professor at the Lisbon University of Economics in ISEG: “in the medium and long term, can Portugal with money-the three per cent interest supply, that is sufficient.” Last but not least, because the final Pay off of the debt of generations would take.

The seat of the Socialist party of Portugal. It was here that the new fiscal policy designed.

Problem of the interest

What is problematic, for Portugal, especially the debt service: this year Alone, beating the interest rates with a proud eight billion euros; the largest budget item, ahead of wages or social security charges. Nevertheless, going to Portugal for his debt but to pay, even if it is probably the interest rate situation like renegotiating the cost. No wonder, because such an amount is in the economic development put, would all the problems at a stroke resolve jokes Professor Duque.