Portugal expected to pass austerity budget

EURO ZONE: THE PORTUGUESE parliament is expected to pass an austerity budget today. The budget was presented earlier in the year by prime minister José Sócrates’s Socialist Party.

After months of acrimonious debate between the Socialists and the right-of-centre Social Democrats, the two parties reached an agreement at the end of last month. Social Democrats agreed to abstain from voting on the budget, thus allowing it to pass.

Problems that had held up the agreement included measures to reduce the deficit. The budget included raising taxes, curbing spending on health and education, cutting pensions, drastically reducing unemployment benefits, and other measures which have caused unrest in the country, leading to a general strike on Wednesday.

The two main labour unions – the communist-dominated CGTP and its bitter rival the Socialist UG – got together and called the strike, which closed hospitals, schools, public transport, the courts and partially affected fire departments and even the police.

It was reported that some police had refused to issue about 500 fines.

The strike was non-violent, except for a few isolated cases outside major cities.

As usual there was a wide divergence of opinion about the number of persons who had actually gone on strike. The unions claimed 85 per cent adherence involving three million workers, while the government claimed only 29 per cent had participated. Whatever the numbers, the strike brought out twice as many people as the last general strike in 1988.

Questions still facing the government as they wait for the budget to be passed include the threat of having to appeal for a bailout, which raises bitter memories of when this was necessary after the 1974 revolution.

It has also become apparent that the prime minister will be forced to remodel his government, including replacing finance minister Teixeira dos Santos.

In a surprise move, the minister announced he is in talks with Portugal Telecom to take over the company’s pension fund, which would bring €1.6 billion into the government’s coffers.

The two parties differ on ways to cut spending to lower the deficit.

The Social Democrats want to scrap government plans for large projects, such as a new airport and high-speed trains between Lisbon and the cities of Porto and Madrid.

There are differences of opinion, even within the Socialist ranks, on the finance minister’s decision not to cut salaries in state enterprises.

On the whole, the general opinion of most people in strategic positions is that Portugal is in a better financial condition than Ireland. Manuela Ferreira Leite, former leader of the Social Democrats and a former government minister, said recently: “There is no comparison between Portugal and Ireland.”

Portuguese president Cavaco Silva announced that the country’s main banks are in good condition.

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