Comment du Jour

Portugal--Bailout Blues?


Portugal's mood can often be characterized by the Fado music, the soulful and meloncholy songs about Love, Fate and Fortune. Over the past year as Euroland teeters on the brink of bankruptcy, Fado comes to mind as Portugal's good name unfortunately surfaces in the list of debtors.

But Portugal is not Greece nor Ireland. Lisbon's debt numbers are much better as the budget deficit is projected to fall from 9% of GDP in 2009 to 4.6% n 2011. And GDP growth is expected to rise by over 1% this year, anemic but again better than many. Greece saw a nearly 16% budget defict in 2009 and will better itself with about 9% this year if things go as planned (they rarely do).


But now that the bankers have bailed out Ireland to the tune of $90 billion, all attention turns to the next European countries whose finances are teetering. The list is depressingly solid--Spain, Italy, and Portugal.

Portugal's profligate spending under the Socialists is indeed part of the problem, as is a bloated public sector. Here's a country where civil servants get a 14 month salary--in other words a one month cash bonus at Christmas and another in Summer.

Given they are broke, the Lisbon government should show good faith and trim such benefits so that wider layoffs can be avoided.

Portugal should not be on the Naughty List along with Greece and Ireland, but at the same time should be extra nice to avoid the wrath of the Eurocrats.

In the meantime the Financial Fado can be written how little Portugal edged to the brink, lost the love of Europeans, but heroically saved itself!