FRANKFURT (MNI) – A recession extending to 2012 and three years of
pain await Portugal, despite the E78 billion financial aid package that
Lisbon recently agreed with the European Commission, European Central
Bank and the International Monetary Fund, the Financial Times said on
Thursday.
The economic forecasts included in the agreement show the economy
is expected to contract between 1.5% and 2% both this year and next,
while the jobless rate could top 12%, the business daily reported.
However, Portugal’s pain does not end there. According to the FT,
terms of the memorandum of understanding call for a freeze on public
sector pay and pensions until 2013, while a special tax would be applied
on pensions above E1,500 per month. A tax would also be applied to
welfare benefits
For dismissed workers, a unemployment benefits would give only 10
days of pay for every year worked, compared with 30 days under current
law. The duration of the benefits would be cut to a maximum of 18 months
from 36, while the maximum amount paid would also be decreased, the FT
said.
The deal will push Portugal to bring its deficit level to 3% of GDP
by 2013, a year later than the government’s previous consolidation
program had foreseen. However, with the 2010 deficit having been
recently revised upwards to 9.1% of GDP, many economists expect it to be
more difficult for Portugal to hit its fiscal target, the paper added.
— Frankfurt bureau: +49 69 720 142; email: frankfurt@marketnews.com —
[TOPICS: MT$$$$,M$$CR$,M$X$$$,M$$EC$,MGX$$$]
