Debt-ridden Portugal on track, claims prime minister

Portuguese Socialist Party head and Prime Minister Jose Socrates has claimed his country is a model pupil in restoring its finances.Many analysts and economists have warned that Portugal may be the next European Union (EU) member to tap the recently established European Financial Stability Facility (EFSF). Greece and Ireland have already received billions in credits and liabilities from fellow EU members to avoid state bankruptcies.Some newspaper commentators and politicians recently suggested an increase to the EFSF’s current 750-billion-Euro frame as Portugal, Spain or Italy may be next to seek financial support.Now Socrates has rubbished speculations that his country is in need of help.”We are one of the most successful countries in the EU in terms of getting federal finances in order in 2010,” he told the Austrian Kurier newspaper today (Fri).Socrates vowed to continue the strict cost-cutting procedure in which civil servants’ pensions were slashed. The Portuguese government also agreed to increase the debt-stricken country’s value-added tax (VAT) by two per cent to 23 per cent.When asked how he wants to modernise his country, the prime minister, who met Austrian Social Democratic (SPÖ) Chancellor Werner Faymann for talks in Lisbon earlier today, said: “We have been working on modernising Portugal since 2005 (when I took office). We eradicated structural weaknesses of the economy and improved the education of many citizens. (…) Our expenditure on the research and science sectors soared from 0.8 per cent to 1.7 per cent of the gross domestic product (GDP).”Socrates also said he does not expect the intensity and number of protests against the austerity measures to increase. “There are resentments and I understand that. But I know that my fellow citizens have understanding as they know about the financial situation the country is in,” the former environment minister said.Portugal had a budget deficit of 7.3 per cent last year, and its government recently said it wanted to lower the rate to 4.6 per cent of the GDP this year.The country, which joined the EU in 1986, received more than 2.24 million Euros as part of the EU’s spending programme which financially backs weaker economies among its 27 member states.Austria is among the 11 EU members which pay more than they receive. A Karmasin poll showed last month that 58 per cent of Austrians are convinced the Eurozone – the EU’s 17 member countries which use the Euro as their currency – will get through its current crisis, while 16 per cent fear the Eurozone will collapse.