Portuguese distrust the EU, IMF's helping hand
Read more: http://www.montrealgazette.com/news/Portuguese+distrust+helping+hand/4728157/story.html#ixzz1LR7ya3Qz
LISBON, Portgual — Confusion reigned in Portugal on Wednesday over the implications of the bailout deal that was reached with the European Union and the International Monetary Fund.
A positive evaluation of the deal given by Prime Minister Jose Socrates was "political propaganda," economist Alvaro Santos Pereira said.
"We will only know the truth when the EU and IMF speak out," he added.
Socrates announced a "good agreement" with the two institutions late Tuesday, but the EU did not want to confirm the deal until obtaining the backing of the conservative opposition.
Cross-party support was deemed essential to make sure that the bailout conditions will be respected by the new government that will emerge from the June 5 elections.
Government sources put the bailout at $115 billion, but there was no official confirmation for that figure.
Financial markets welcomed the deal, with Portugal's bond yields going down, even if three-month treasury bills were only sold at high interest rates.
Socrates said the bailout would require relatively few new sacrifices from ordinary citizens, but critics accused him of hiding the real nature of the tough conditions imposed by the creditors.
"My pension only amounts to 300 euros ($445) a month, and now I hear that taxes on transport and housing are going up. That is crazy," a 66-year-old man named Joao said.
There has long been concern about the financial rescue increasing poverty in what is already Western Europe's poorest country.
Socrates presented the bailout conditions as more lenient than those agreed with Greece and Ireland, the two eurozone countries that were rescued before Portugal.
The deal was essentially just a somewhat tougher version of the government's fourth austerity package, the premier said. A rejection of that package by parliament led to Socrates' resignation on March 23 and prompted President Anibal Cavaco Silva to call snap elections.
There would be no cuts to lower-level pensions, no salary or job cuts for civil servants, and no undermining of the national health service, Socrates pledged.
The pledges were met with skepticism, with communist representative Agostinho Lopes saying the only aim of the loan package was to "save banks."
The bailout conditions included "a brutal reduction of public investments, closing public services, privatizations," he complained.
Lopes described the rescue deal as a "road to disaster" after which Portugal would be financially even worse off.
Even conservative representative Fernando Nobre, whose Social Democratic Party was expected to back the package, slammed it as a "violent attack" against the welfare state.
Socrates' earlier austerity policies already hit citizens hard, with some aid organizations saying they are unable to cope with the ballooning numbers of people relying on charity to survive.
According to the news agency Lusa, the draft bailout agreement showed a trimming of the public administration, raising of taxes, cuts in social spending and a restructuring of the judiciary.
The draft issued a gloomy economic forecast, saying the Portuguese economy would contract 2 per ent in 2011 and 2012 before beginning to recover in 2013.
© Copyright (c) McClatchy-Tribune Information Services
Read more: http://www.montrealgazette.com/news/Portuguese+distrust+helping+hand/4728157/story.html#ixzz1LR86pH2v
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