The former Minister of the Economy Álvaro Santos Pereira has resurfaced at the OECD where he works as a top economist.
Pereira’s previous post-ministerial occupation as an author began and ended with his book that attacked the former Deputy Prime Minister Paulo Portas, a party leader who later retired from mainstream politics.
Álvaro Santos Pereira was squeezed out of power when Portas has his tizzy-fit in the Summer of 2013 and forced PM Passos Coelho to make Portas-approved appointments which included a new Economy Minister Pires de Lima.
Now that he is the Director of National Studies at the OECD, Álvaro Santos Pereira can step back into the limelight, which he has today by opining that Portugal will miss its deficit target this year if the government pumps money into the failing Caixa Geral de Depósitos.
The new head of Caixa, António Domingues, said the bank needs €4 billion and Prime Minister António Costa agrees that refinancing is necessary but nobody yet has said how this will come about.
Pereira says that if the refinancing goes ahead with public money, as Caixa is a publically owned bank, Portugal's deficit "will certainly be above 3%" at the year end.
In an economic forecast released yesterday, the OECD worsened its estimate for Portugal's 2016 deficit target and expects it to reach 2.9% of GDP this year, leaving no room at all for the Caixa refinancing deal and does not take into account the looming multi-billion euro loss when Novo Banco is sold this summer.
The Portuguese government is sticking to its deficit goal of 2.2% of GDP, close to the International Monetary Fund which anticipates 2% and the European Commission which estimates 2.7%.
Álvaro Santos Pereira explained that he is taking into account "very weak growth" from other countries "that have very large implications for Portugal," indicating that "clearly the global environment is difficult."
"We are having the worst growth of world trade in recent decades, there have been only five times in the last five decades in the growth of world trade was below 2%. All these years have been years of global recession. We are not talking about global recession but we are talking about a very significant slowdown," added Pereira who trained as an economist.
Pereira sees no need for EU sanctions for Portugal, the other big topic among European Commissioners, saying that Portugal had done well with its reform programme between 2011 and 2013 – a period when he was a minister, naturally.
“I am totally against any kind of sanctions being applied to Portugal. In fact, I think it would be shameful if sanctions were applied to a country that made the sacrifices that Portugal did and that made the reforms that Portugal did," said Pereira, arguing that the country "has to be rewarded, it cannot be penalised with sanctions which are totally unwarranted at this time."
