At a time when the Government follows excited by historically low interest on the debt and performance of tax revenue in 2014, which was higher than expected, some are not so optimistic. Although the balance sheet that can be carried over from last year and even events such as the oil price decline, the International Monetary Fund (IMF) does not believe that Portugal will be able to have a deficit below 3% of GDP by 2016 without additional measures. The report of the first post-program assessment, released on Friday, the Fund points to a deficit of 3.4% this year, a value that exceeds the government’s target of 2.7% in anything like € 1,250 million and which, if confirmed, will not allow Portugal exit the excessive deficit procedure.
Remember that since the European Commission, which also held the post program with the IMF assessment, had warned in its report for the same problem. At issue are “macroeconomic projections and optimistic revenue,” something that Brussels had also been stressed, and that happen in a year when several items of expenditure will have loosened belt – pensions and salaries, for example – and where there is tax reduction ( IRS and IRC). The IMF says that in this way, the consolidation effort is reduced.
2014: You can meet
Since the 2014 deficit is reached, which is no longer a surprise given that reported numbers by the Budget Directorate-General last week. The IMF points to 4.9% of GDP and the government’s target is 4.8% (including extraordinary effects, otherwise is 4% and can even be below, with the IMF to point to 3.9%) .
“While the 2014 budgetary target seems perfectly achievable to meet the budget estimates of medium-term government itself significantly more ambitious expenditure reforms will be needed”, says the report. Come here, for example, recommendations to bet on savings with retraining, salary supplements the state and pensions of the General Pension Fund.
The Head of Mission in telephone press conference from Washington, warns that “a great effort is needed to ensure that the debt continues to fall” and notes that achieve a deficit less than 3% is essential in preventing Portugal’s excessive deficit procedure (EDP) and to regain credibility.
Elections do not help anything
For men IMF, the parliamentary elections scheduled for this year will not help anything to speed up reforms. “As we have seen in the last six months [the report was closed in December], the pre-election period will not be relevant reform initiatives, will contribute to a greater temptation for populist policies,” reads the document.
For the more distracted should be emphasized that these post-program reports come up with a tougher language and criticism of governments, which did not happen in the quarterly reviews. Although there could be differences not transpareciam so clearly in the documents that were produced jointly. Now, no tranches to release, the government has more room to decide and only left the power of the word that the IMF and the Commission use more decisively.
In the macroeconomic front, the IMF expects growth of 0.8% in 2014 and an acceleration to 1.2% and 1.3% in 2015 and 2016. Amounts in line with the most forecasts available. The government, for example, expects a rate of 1.5% this year.
One of the problems right now is that the scope for acceleration is very low. The report says that even in the medium term, “it is expected that growth reaches a plateau of 1.5%”, since the dynamics of the economy is affected by the investment (net) negative and by demographics, is very much based on earnings that productivity, in turn, “depends on the successful implementation of structural reforms.”
Rise in salary minimum will “hurt”
The IMF report returns to one of the hot topics of the first post-program: the rise in the minimum wage of € 485 to € 505 and dedicates a text box to the analysis of situation where concludes that “this measure can precisely harm the group [workers] you want to support.”
The Fund highlights the fact that the minimum wage increases “have persistently exceeded productivity gains” and the value in Portugal not be “so low that required of this rise even “. And warns that the price to pay for those workers who are in the labor market segment covered by the minimum wage is measured in jobs.
“Measures that increase the cost of employment of these workers, if they go up the income of those who have work, will maintain the high unemployment in these segments longer and delay the normalization of the market work, “the report said.
One of the points of concern is the so-called labor slack, ie, a measure of ‘waste’ of workers that are broader than the unemployment rate and measuring all workers the economy could use and not use. Says Subir Lall that “remains very high” and that should be a priority, because the recovery of the Portuguese economy is being U and V not as expected.
No comments:
Post a Comment