The very important chief economist of the European Central Bank, Peter Praet, said today that he was satisfied with the results of Portugal’s financial adjustment programme, in particular with the reforms undertaken by the government.
"I am satisfied with what has been done in Portugal. Today the reforms are bearing fruit. But there is often the risk of fatigue in relation to these reforms and the question is always the same, will the authorities find the support of the population to ensure the success of the reform process?”
Praet asked the question during The Lisbon Summit conference organised by The Economist in Cascais but being a banker he may not have realised that the answer to his question is 'no,' the Portuguese government has little support outside the immediate financial community for its reforms that have spurred widespread unemployment, business closures and a consequent rise in poverty and hunger.
The economist argued that Portugal will not necessarily make an exit like the Irish government did at the end of the financial assistance program, there are other solutions such as a ‘precautionary programme.’
"If you move to a precautionary programme you enter a system that is a kind of insurance, which shows that we are not so confident that the country can go it alone," said Praet who also considered that the gross domestic product per capita in Portugal will grow 13.5% in the next ten years with the implementation of market reforms and labour and welfare state reforms.
Part of the GDP inrease is due to a decline in population but the comment by Praet about a precautionary programme will upset the government which has careful so far in choosing its words. Praet's comment that such a programme is a sign of weakness, albeit true, will push government thinking away from this solution.
