Friday, July 15, 2011

Where is the money ?

Newly-elected Prime Minister Pedro Passos Coelho has this week cast doubt over the integrity and honesty of his predecessors in government by accusing them of not telling the full story when it came to the country’s accounts. “What we were told was there and what we found are two different things”, he explained, saying that the people faced even “greater hardship” as the new government struggles to balance the nation’s books. But the Socialists, now in opposition, have challenged Pedro Passos Coelho to explain himself, arguing that he is merely looking for a scapegoat to force through more austerity measures on taxpayers.

But while the Prime Minister’s comments, made at a PSD conference earlier in the week, sent shockwaves through the corridors of power in Lisbon, details have only been trickling through.
He further explained that he would dwell on the legacy left by his predecessors, adding at least “now we know what we are really up against.”
While the country was not given an explanation, the Office of National Statistics has revealed that Portugal’s budget deficit for the first quarter of the year stands at 7.7 percent, 1.8 percent above the figure Lisbon said it would achieve by year’s end.
The Prime Minister did not disclose the magnitude of this “colossal hole”, but PSD MP Miguel Fasquilho, who is also deputy chairman of the bailout oversight commission, said Portugal would meet its targets. He refuted suggestions that the government was already looking for excuses to justify a possible default on its sovereign debt repayments.
“There is no attempt here to escape the responsibility of meeting the 5.9 deficit target for 2011.”
No sooner had Pedro Passos Coelho made his accusation than high-ranking members of the opposition Socialist Party called upon the Prime Minister to explain how the “colossal hole” in Portuguese accounts had been missed by the so-called Troika, which consists of the International Monetary Fund, the European Central Bank and the European Union.
“There were reputable international bodies examining all our accounts for over a month and a half. The Prime Minister needs to explain how the Troika was unable to detect these gaping holes in our accounts”, charged Socialist MP João Galamba.
Opposition MP Vitalino Canas also called on the Prime Minister to appear before parliament to explain his allegations.
The next parliamentary debate is set for the end of the month, at which time Pedro Passos Coelho is expected to fully explain the extent of the “colossal variation” he and his cabinet have detected.
Prior to this debate, the Socialist Party will elect a new leader. The current leadership battle is being waged by Francisco Assis and José António Seguro, with the latter the bookmakers’ favourite as opposed to Assis, who was former Prime Minister José Sócrates’ chief whip in the previous legislature.
Neither of the two candidates has commented extensively on Pedro Passos Coelho’s remarks in a clear attempt not to overstep their authority, but both have pledged to tackle the issue head-on should they be chosen to lead the largest opposition party.
Other members of the opposition, while not discounting the veracity of the Prime Minister’s claims as to the country’s worse-than-expected state of accounts, believe he might have done this to soften the blow of a tax on Christmas bonuses.
The tax, details of which will be published in next week’s edition of The Portugal News, will result in workers being charged 50 percent of the difference between the national minimum wage and their salaries.
As an example, a worker earning €1,000 a month, should expect to pay in the region of €285 to the taxman this Christmas.
It is unclear as to whether employers, employees or both will be responsible for this tax, though it seems certain that workers who only receive 12 pay cheques will still be liable to make a payment to the taxman over the festive season.
Brendan de Beer