IMF officials who analysed Portugal’s current situation during the bailout’s third assessment said that it would be hard for the country not to fail without measures to boost the economy.
On its third assessment of progress made under the bailout schedule, the International Monetary Fund recommended that Portugal should implement measures to overturn the economic crisis if it wants the rescue program to succeed.
In today’s edition, newspaper i points out that IMF officials who analysed Portugal’s current situation during the bailout’s third assessment said that it would be hard for the country not to fail without measures to boost the economy.
“The government needs to identify and adopt a set of reforms to develop short-term responses on the supply side”, said the report, pointing at the “weak progress” of the government in this issue.
The administration led by Prime Minister Pedro Passos Coelho is implementing harsh austerity measures that have thrown the country into a deep recession and caused high unemployment. Until now the only sector still boosting the country’s economy, exports are losing strength as businesses struggle with lack of credit.
However the so-called EU-ECB-IMF troika’s proposal to cut social security contributions made by businesses was shelved by the government due to the fall in revenues it would mean for the state.
“In the absence of these measures we do not forecast Portugal will recover the market share it lost in recent years”, said the report, quoted by i.
The fund’s report added that its forecasts – of 0.3% growth in 2013 and 2% in 2014 – could be revised as “uncertainties” as the country’s program unfolds, similarly to IMF forecasts about the country’s return to the markets.