Good evening,

I wish you all a Happy New Year.

2012 was a particularly tough year for the Portuguese.

Unemployment, especially among the young, has reached disquieting proportions.

Many families have had to reduce their day-to-day expenditure, even on goods that are essential to a life with dignity.

Many small and medium-sized companies have gone out of business due to the drop in demand for goods and services.

We have to urgently put an end to this recessive spiral, in which the drastic reduction in demand leads to companies closing and higher unemployment.

According to official forecasts, the difficulties that families are facing will get no easier in the year now commencing.

The State Budget for 2013, approved by Parliament, aims to meet the objective of reducing the deficit agreed with the international institutions that have lent us the funds necessary to address the financial emergency that Portugal entered at the start of 2011.

Implementation of the Budget will lead to a reduction in people’s income, through a major increase in taxes and through a reduction in social services.

Everyone will be affected, but some more than others, which raises founded doubts concerning the justice of how sacrifices are shared.

Upon my initiative, the Constitutional Court will be called on to pronounce on the 2013 State Budget’s conformity with the Constitution of the Republic.

The Budget came into force today, on day one of 2013. If this were not so, the Country would have been deprived of the most important instrument of economic policy available to it and the consequences for Portugal in international terms would be extremely negative.

My fellow Portuguese,
Increasingly more and more people are asking themselves about the reason for the sacrifices demanded of them and if these sacrifices are really necessary and useful.

People want to know if their effort is worthwhile and if the Country will pull through in the end.

It is essential for everyone to understand that the difficulties that Portugal is going through derive from the unsustainable level of the State’s debt and of the Country’s foreign debt.

The State’s debt exceeds the total of national production in one year. Interest absorbs 20% of all taxation that is collected.

While this situation endures, where the State’s expenditure is greater than the revenue it takes in, we will accumulate more debt over the existing debt and the amount of interest will continue to increase.

On the other hand, the Country’s foreign debt is more than twice annual production, implying the payment abroad of a very high amount of interest.

This situation is unsustainable and drastically limits the Country’s possibilities of raising financing.

To correct this, Portugal is executing the financial assistance program negotiated by the previous Government with the European Union and the International Monetary Fund.

Failing to honour the international commitments we signed is not a credible option.

Trying to negotiate a pardon of part of the State’s debt is not a solution that ensures a better future. It could create a momentary illusion, but, in the end, we would be in a dramatic situation, worse than the one we are in now. No-one in their right mind would want such a situation for our Country.

We therefore have to meet the international obligations we agreed to.

We have to balance the public accounts and reduce our foreign debt. While we do not do this, our financial independence will always be limited.

But we cannot ignore the fact that, in 2012, it became clear that a process of reducing the imbalance of the public accounts accompanied by negative economic growth is becoming socially unsustainable.

The very aim of balancing the public accounts becomes more difficult to achieve, because budgetary austerity leads to a fall in production and lower fiscal revenue. This is followed by further austerity to achieve the targets of the public deficit, which leads to a further drop in production and so on.

It is a vicious circle that we have to break.

We need to regain the confidence of the Portuguese people. It is not enough to regain the confidence of our foreign creditors. We have to work to unite the Portuguese people and not divide them.

At the root of the Country’s difficulties is a fundamental problem: the lack of growth of our economy.

It is here, on economic growth, that we have to concentrate our efforts. Otherwise, the Portuguese people’s sacrifices will be in vain.

Our economy has suffered very negative impacts from abroad which are outside of our control and which were not foreseen when the financial assistance agreement was negotiated.

I am speaking of the recession in the Euro Zone and, in particular, the economic crisis that is affecting Spain, the main destination of our exports.

To achieve growth, support from the European Union for investment and competitivity is particularly important, as well as improving conditions in the banking system for the financing of companies.

Our companies pay much higher interest rates on loans than companies in the European Union.

We have arguments – and we should use them resolutely – to demand the support of our European partners in order to achieve a more harmonious balance between the budgetary consolidation program and economic growth.

In over 25 years of belonging to the European Union, we have shown that we are a credible partner in the process of integration.

It is in our interest, and also in the Union’s interest, that cohesion and solidarity should not be mere words of circumstance. It is when the going gets tough that the solidity of the European project is put to the test.

In the Country’s current situation, the political and social agents have to act with a great sense of responsibility.

Resolving the nation’s problems presupposes dialogue, consensus and an understanding that considers the Portuguese people and the Country as a whole.

We should bear in mind that the financial assistance program was supported by parties that represent 90% of the Members of Parliament, members elected in elections held a little over a year and a half ago.

The Country is in no position to add a serious political crisis to the economic, financial and social crisis it is immersed in.

We would regress into a situation that is much worse than the one we are in now.

We should therefore work and pull together to find the best solutions for the Portuguese people.

2013 is going to be a tough year.

But it can also be a year in which we begin to turn around the negative trend we have been suffering in national production and employment, a year in which the climate of confidence improves and business investment begins to grow.

I wish that, with patriotism, and above all thinking about the Portuguese people, the Government, the political forces and social partners actively work so that, in 2013, a cycle of economic growth may begin.

If everyone does their duty, it is possible that growth will become a reality in this new year.

For my part, I hope that this is the case.

I know we have the solidarity of various countries of the European Union, countries that recognise our effort and consider that, for the good of the whole Union, Portugal should be helped and deserves to be helped.

A number of foreign business managers with whom I have had contact indicate Portugal as a country which is worth investing in, a destination with great potential.

I have met young businessmen and women of great merit, with an innovative spirit, who export what they produce and who should be encouraged by the public entities and supported by the banking system.

The social partners with whom I have held frequent talks, demonstrate that they have a realistic and modern vision of business and labour relations, and are prepared to address the demands of the times we are living in.

But my hope is founded, above all, on the way in which the Portuguese have reacted to adversity and sacrifice.

The Portuguese people have shown a sense of responsibility that should serve as an example to our politicians.

The Portuguese are aware that they are living in hard times, and they have not given up in the hour of need of those who are most in need.

It is moving to see the Portuguese people’s extraordinary spirit of solidarity and mutual support.

The Portuguese deserve better days, for themselves and for their children, for future generations.

In the hope of better days, I wish all of the Portuguese a Happy New Year.