FT article: Fiscal adjustment programme for Madeira; Troika very satisfied with Portuguese Government’s commitment to programme; Portugal on track to meet bail-out conditions

International, Portugal and Madeira News from Paul Abbiati:

FT article: Portugal on track to meet bail-out conditions

“The European Union and International Monetary Fund said Portugal was on track to meet the conditions of its 78bn financial rescue programme, clearing the way for the
payment of the next 8bn instalment.

Officials from the so-called troika – the EU, IMF and European Central Bank – said Lisbon had met its budget deficit and public debt targets to the end of September.

FT article: Fiscal adjustment programme for Madeira; Troika very satisfied with Portuguese Government’s commitment to programme; Portugal on track to meet bail-out conditions 1

“We are very satisfied with the government’s commitment to the programme,”

Jurgen Kröger, an EU representative, said on Wednesday after the troika completed its second
quarterly review of Portugal’s progress with the rescue package.

Vítor Gaspar, Portugal’s finance minister, said the next instalment of the bail-out funds would be transferred in December and January. However, he acknowledged that the
centre-right coalition government, which took office in June, had been forced to take exceptional measures to meet the fiscal targets agreed with the EU and IMF for 2011.

This followed the disclosure of previously unrecorded public deficits in the Portuguese island of Madeira and elsewhere.

Portugal is committed to reducing its budget deficit from 9.8 per cent of gross domestic product last year to 3 per cent in 2013.

The exceptional measures needed to meet this year’s targets include the transfer of bank pension funds to the state social security system. The government will also cut the Christmas and holiday subsidies usually paid to public sector employees and state pensioners, which are equivalent to two months’ pay.

Mr Kröger said no further exceptional measures for cutting the deficit would be accepted during the rest of the three-year rescue programme.”

“Over all, the programme is off to a good start. However, its success crucially depends on continued implementation of a wide range of structural reforms that will remove the rigidities and bottlenecks behind Portugal’s decade-long growth stagnation,”

the troika said.

Fiscal adjustment programme for Madeira

Mr Gaspar said a fiscal adjustment programme for Madeira was being prepared on similar lines to the rescue package that Portugal agreed with the EU and IMF in May.

FT article: Fiscal adjustment programme for Madeira; Troika very satisfied with Portuguese Government’s commitment to programme; Portugal on track to meet bail-out conditions 3

He added that there would be no change in the targets included in the bail-out agreement requiring banks to lift their core tier one capital ratios, the main measure of capital strength, from the current minimum level of 7 per cent to 9 per cent by the end of 2011 and to 10 per cent by the end of 2012.

He said they would also have to comply with new EU rules obliging them to factor in additional coverage for their exposure to the sovereign debt at market rates, requiring them to raise more capital than previously envisaged by July 2012.

Banks have strongly criticised the recapitalisation programme agreed with the troika, claiming in a letter to EU officials in Brussels that it could lead the effective “nationalisation” of Portuguese lenders.

They are strongly opposed to provisions that would allow the government to use a €12bn fund created as part of the rescue package to strengthen their capital by acquiring temporary state shareholdings.

Bankers have been in talks with the government and the troika over the measures, which are scheduled to go before parliament later this month.

Images from the Diario Newspaper

link: http://www.ft.com/cms/s/0/805ac784-1081-11e1-8010-00144feabdc0.html#axzz1dmqtJh5o

7 thoughts on “FT article: Fiscal adjustment programme for Madeira; Troika very satisfied with Portuguese Government’s commitment to programme; Portugal on track to meet bail-out conditions”

  1. Wot? Still no “funchal” weather? Well, in Gaula, it is SUNNY with light showers towards Machico and out to sea etc……..mostly calm with a light NE breeze, 50% humidity and outside shade temps of 21*c rising slowly – looks lovely towards Funchal also.

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  2. Just a reminder. This week end the car boot sale, Sunday on will be the last one till next year. Decembers car boot falls on Christmas, so it be unlikely they be having one.

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