Portugal's Minister of Finance, Maria Luís Albuquerque, (pictured) has confirmed that the government has decided not to ask for an extension to the bailout programme, preferring to forego the final €2.6 billion of money due under the agreed schedule.
After the Constitutional Court rejected three key government cost saving measures in the 2014 Budget ministers decided not to submit any alternative measures to fill the + €600 million funding gap as these too may be kicked out by the Constitutional Court and time is running out.
Any alternative measures have to be submitted by the end of this month for the 12th Troika review to have any chance of success and for the money to be released. Either this, or the Treasury would have formally to apply for an extension to the bailout programme, not a good option as it organises bond sales launches to show the world that Portugal now can stand on its own two fiscal feet.
The Troika is said to be unhappy at the prospect of receiving an application for an extension so the government has foregone the money and will try and turn it into a success story, when in fact it represents another example of the executive’s inability to propose cuts that are within the constitution’s guidelines that all of Portugal's governments must follow if the people are to be defended against legislature that oversteps the mark.
Asked if the decision might put into doubt the credibility of the country, Maria Luis Alburquerque predictably said the situation, "is exactly the opposite."
The IMF has not yet commented but is said to be very dissatisfied with this outcome as it wanted to look at alternative tax raising or cost saving measures and then complete the 12th review by sending the final cheque.
Germany has broken ranks within Europe by expressing deep concern that the programme has ended in this way, saying that it shows a loss of determination on the part of the Portuguese Government to continue and conclude the bailout programme.
