sábado, abril 09, 2011

Paulo Trigo Pereira escreveu isto no "The Portuguese Economy". Eu escrevi o que está a seguir (na secção de comentários):


Bailout and the 10 Capital Sins of Portuguese Public Finances

Now that Portugal will have a bailout it is important to understand, what can be labeled as the ten capital sins of Portuguese Public Finances from a politico-economic perspective. This small essay (provided here as times goes by) may be of interest to several groups of people. The technical experts of the institutions that will negotiate with Portugal the bailout (mainly from the European Commission, The European Central Bank and the International Monetary Fund); the European politicians that lead the EU, those who have worked out the revisions to the Stability and Growth Pact (SGP) and those who are now redesigning the European Stabilization Fund ; the Portuguese citizens who will mostly suffer from the mismanagement of public finances, in particular the young generations who will pay the major part of the bill; economic journalists; and last but not least the Portuguese politicians who will run Portugal (and those who will stay in opposition) after the 5th of June general election .
As will become apparent some of the "sins" have developed in close connection with the structure of incentives embodied in European rules. Others are more idiosyncratic. The interest in presenting them is that although they are specifically Portuguese, and should be taken into account by different “stakeholders”, they exist in slightly different forms in several Europeans countries. So what some of them reveal is the urgent need for reforms at an European level.

The order of presentation will not be the sequence of relevance and all comments will be welcome. The timing of writing is uncertain, but I will try (not promise!) one or two contributions per week.

PS Some economists disregard the problem of public finances saying that the problem of Portugal is lack of economic growth and that having the latter the former will be solved. We all know that there is a relationship between the nominal growth rate, and the deficit-to GDP ratio that sustains a constant debt-to-GDP ratio. When the Stability and Growth Pact was designed, politicians assumed European economies will grow nominally on average at 5% so that a deficit ratio of 3% will keep the debt ratio at 60%. Although it is obviously truth that growth really matters, the argument that deficit and debt are just a byproduct of other issues is not only fallacious but also dangerous. As we will show the mismanagement of Public Finances in Portugal is a consequence of several structural problems, the sources of which are independent from economic growth. If these problems are not solved, they will impair economic growth, ie they will have a counter-effect on any measures taken to improve growth. That is why it is dangerous to disregard them.


Vladimiro Jorge Silva said...
Yet this only happened due to the speculative attacks to our sovereign debt... Though this is not a valid argument, there are several Eurozone countries that would had exactly the same problems if they had been under the same kind of pressure. Of course we have lots of reasons to complain and became very vulnerable due to a range of acumulated economic policy mistakes through the years. Our governments have been unwise and increased public debt to the verges of obscenity - therefore, we have to acknowledge that we had it coming. However, the real issue here is this: not only we've lost the ability to have a monetary policy (actually it's even worst: we have to live with the German monetary policy!), but it seems that we've also lost the right to a budgetary policy. So, it is absolutely impossible to resist to these kind of speculative attacks while keeping any possibility of economic growth. Also, the same countries that will force us into a series of economic constraints will be the ones growing ahead of us during those years. And the interest rates payed by Portugal will be higher than those that most countries can find in the market - which means that for them this bailout is a low risk, highly profitable financial operation. Last but not the least, in the very next day after Portugal bailout has been announced, the ECB increased the interest rates - which is pretty self-explanatory about how concerned they are with our economy. But never mind... that's just European solidarity at its best!

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