21 February 2012

FT: Lisbon under pressure on bailout terms

Opposition, business and trade union leaders are stepping up pressure on Lisbon to renegotiate the terms of Portugal's €78 billion bailout agreement, in order to alleviate the impact of painful austerity measures on the country's recession-hit economy.

António Seguro, leader of the centre-left Socialist party, which negotiated the rescue package before losing a general election in June last year, told international lenders this week that Portugal needed “at least another year” to meet agreed fiscal targets. It was the first time one of the three main political parties who signed up to the bailout programme in May had publicly broken ranks over an agreement that requires deep public spending cuts, sweeping economic reforms and unprecedented tax increases.

A harsh recession and record unemployment – the consequences, Mr Seguro said, of failing to make economic growth and jobs the government priority – are placing heavy strains on Portugal’s traditional social cohesion. António Saraiva, head of the Confederation of Portuguese Industry, has warned that the economy faces “collapse” if more finance is not made available to companies. He believes Portugal needs an additional €30 billion in rescue funds. Arménio Carlos, a central committee member of the hardline Communist party recently elected head of the CGTP-Intersindical, the main union confederation, will propose increasing the amount of Portugal’s bailout when he meets officials from the so-called troika – the European Commission, International Monetary Fund and European Central Bank.

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