Welcome to the Official page of the Presidency of the Portuguese Republic

We celebrate today the anniversary of that dawn when, at the end of 48 years of dictatorship, we found freedom and the democracy that we so coveted.

In 2014 we will be celebrating the 40th anniversary of the 25th April. The 25th April is everyone’s heritage and will be commemorated by all the Portuguese.

All national events are a reason for celebration, but must also be an occasion for us to reflect over the paths we have treaded in the past. Only thus will we be able to learn from History and to pass on our experience to the new generations.

In a few days two years will have gone past over the date when the Portuguese Government, facing the imminent collapse of the financing of the State and of the economy, was obliged to recognize what could not be postponed.

The then Government had to request external aid from the European Commission, from the International Monetary Fund and from the European Central Bank, institutions before which it became committed, through a demanding programme of financial aid which was supported by a wide party political spectrum.

At the end of these two years, and with the purpose of ensuring a better preparation for the near future, now is the time to quietly and objectively reflect on the carrying out of the Programme of Financial Aid and on the changes that meanwhile occurred in the Economic and Monetary Union.

It is unarguable that the Programme’s execution has revealed grievous consequences, which are deeply felt in the day-to-day life of the Portuguese, especially those that are unemployed. But, with similar impartiality, we must also recognize the objectives achieved.

Amongst these objectives, it is important to underline the balance obtained in the external accounts, a result which had not been reached for many years. From a chronic imbalance situation, Portugal achieved, in 2012, a surplus in its external financing capability.

A relevant part of this success is owed to the increase in the export of goods and services, especially towards new markets located outside the European Union, and to the increase in its technological components. This is a path that has been proven correct and that, as such, must be pursued with still greater intensity.

A small economy open externally, as is the case of the Portuguese economy, may only be sustainable in the long term through an unambiguous pursuance of private investment that guarantees a dynamic export sector bringing with it high added value.

We cannot however forget that a part of the adjustment of the external accounts derives from the reduction in imports, due to the heavy fall in internal demand, mainly resulting from the fall in families’ available income, difficulties in providing credit for companies and the uncertainty and lack of confidence felt by investors.

On another hand, through the execution of the Programme it was possible to strengthen the soundness of the banking system. Banks were recapitalized and are nowadays showing good solvency ratios. The Portuguese are right in maintaining their confidence in our banking system.

It cannot be ignored, however, that the swift deleveraging of the banks resulted in increased difficulties in the financing of many companies, above all in the small and medium sized enterprises.

The fact that production units, which export goods and services and that create wealth and employment, are subject to interest charges that are much higher than those of their European counterparts, seriously prejudices their competitiveness, affects investment decisions and could finally place at issue their own survival.

Facing the fragmentation occurring in the European monetary market, it is urgent to set up new non-banking financing sources for companies.

We must also emphasize the carrying out, in various fields, of structural reforms that, in the medium term, will contribute towards the improvement in the competitiveness of the Portuguese economy. This process is not yet completed and demands a renewed and permanent effort in dialogue and compromise within the scope of social negotiation.

Doubtlessly, anyway, the feature that should be more emphasized in these two years is the sense of responsibility shown by the Portuguese. Our people were faced with great sacrifices and heavy demands and demonstrated their civic maturity, consolidated at the end of four decades of democracy. We did not lose our association with the values of democracy nor have we abandoned the spirit of national cohesion that has always been our characteristic.

To a drama of several situations of need, the Portuguese have responded with an exemplary work of mutual aid and with extraordinary solidarity.

The political and social consensus achieved have contributed to conquer the challenges that Portugal is facing and also towards the positive view with which creditors and markets assess the carrying out of the Programme of Financial Aid.

This factor, together with a greater determination of the European Central Bank in the defence of the euro, led to a very expressive decrease in public debt rates of interest. Good perspectives are thus being opened for Portugal’s return to the external finance markets within the estimated delay, a main objective of the Programme in order to guarantee the indispensable liquidity for economic activity and for the functioning of the State.

Two years after the materialization of the Programme of Financial Aid, the objective recognition of positive features must not allow us to let our attention wander from the most grievous problem that Portugal is facing: the worsening of employment and the increase in the risk of poverty, resulting from an economic depression of a size that greatly surpasses the initial estimates.

Fighting unemployment must be a priority for governmental action. This destruction of human capital places serious personal, family and social issues, and also has a very negative impact on the potential growth of our economy.

In addition to the young people, where the unemployment rate reaches 40%, another group has been deeply affected and unfortunately overlooked. I refer to those who are aged between 45 and 65 years and who are particularly exposed to the risk of permanent exclusion from the labour market. These are generally holders of very relevant experience and professional skills and have a living capital that must not go to waste.

The recessive effect of the initially established austerity measures has been greater than forecast, probably due to errors occurred in the estimates. Added to this effect was a much more adverse European economic environment than had been awaited, specifically in Spain, our main trading partner.

As such, some of the assumptions of the Programme have not been revealed as adjusted to the evolution of reality, which engenders the query whether the “troika” shouldn’t have earlier taken these into account.

Verily, the recessive impact of the austerity measures and the revision, to its worst degree, of the international environment has very significantly affected the efforts of budgetary consolidation, namely the reduction of the deficit and the containment in the increase of the public debt.

In this context, the initial targets for the public deficit have been shown as impossible and had to be revised. It is now estimated that only in 2015 will Portugal not find itself in a situation of excessive deficit.

Even so, it should be emphasized that the primary structural deficit will have achieved a reduction of 6 percentage points of GDP in the latter two years. This is, objectively, a positive sign that should deserve the attention of our European partners, since it represents a greater effort than that carried out by the other countries that are equally undergoing external intervention.

In any case, it seems clearer today that it would have been preferable – by the way, in line with the Budgetary Treaty – to have set, right at the beginning of the aid programme, that the targets for the correction of the deficit would be defined in terms of the variations in the primary structural deficit, using the same budgetary framework.

And, once this external intervention is ended, it may be preferable to set limits to the growth in public expenditure which, easier to assess, bring greater credibility and transparency to the process of budgetary consolidation.

Madam Speaker,
Members of Parliament,

An objective assessment of the course taken in these last two years must take into account the very significant changes that have meanwhile occurred in the governance of the Economic and Monetary Union, in order to obtain answers to the crisis in the Euro Zone.

The rules of budgetary discipline and supervision to which the Member States are subject were substantially reinforced, especially through legislative packages «six-pack» and «two-pack» and through the Budgetary Treaty, which came into force on 1 January of the current year.

This means that, after the Adjustment Programme, Portugal, similarly to all other Euro Zone countries, will continue subject to a strict follow-up by the European authorities, in order to guarantee full compliance with the rules of budget balancing and sustainability of the public debt.

In this scenario, it is an illusion to believe that demands for budgetary rigour will disappear at the end of the Adjustment Programme, in mid-2014.

In effect, in the terms of the Budgetary Treaty, the Country will have to ensure a structural deficit not exceeding 0.5% of GDP and the 124 percent public debt ratio, estimated for 2014, will in the future have to tend towards 60 per cent. To reach these objectives, Portugal will have to maintain a very significant primary surplus for a long period.

All this will be processed within a framework where we will no further benefit from external loans such as those already provided, and will be entirely dependent from the markets to fulfil the requirements to finance the economy and the State. It is fundamental that all the Portuguese are fully conscious of this reality.

Considering these demands, that will prevail for many years, the Country cannot remove itself from a guiding line of sustainability of public finance, of the stability of the financial system and of the control of external accounts. Should this not be the case we would be obliged, if the international financial institutions so agreed, to recur once more to external aid and then, very probably, with harsher and more demanding conditions than those that currently impose so many sacrifices to the Portuguese.

Let there be no illusion.

Portugal has to be prepared for the end of the Aid Programme, which will occur already at the end of next year.

Our political, economic and social agents have to be aware that their actions must be carried out in a much wider period than that which results from the electoral schedules.

Whatever these schedules, whatever the results of the elections, Portugal’s future implies a medium term strategy that takes in line the great challenges that we will have to face even after the completion of the Aid Programme currently in force.

At that time, the Country will have to stay within structural conditions of credibility capable to guarantee the trust of the European Union institutions and that of the financial markets and, as such, it is politically imperative to preserve the capability to generate consensus concerning the path to be followed to achieve the great national objectives.

If an immediacy vision is persisted on, if logic of political brittleness should prevail concerning issues of little interest to the Portuguese, no benefit will result from winning or losing elections, no benefit will result from comprising the Government or being in Opposition.

It is essential that, once and for all, it is understood that permanent conflict and the absence of consensus will penalize the politicians themselves but that, above all, such will grievously affect the situation of the unemployed and of those that were prejudiced in their income and will compromise, for many years to come, the future of the new generations.

It is unarguable that a «fatigue of austerity» has become installed in Portuguese society, associated to the uncertainty as to whether the sacrifices suffered have been sufficient and, more, if they are worth while. These are legitimate queries, that all have the right to place. But, since it cannot equally be denied that the Portuguese are tired of austerity, the anxiety and unease of our fellow citizens must not be politically exploited.

I restate my deep conviction that Portugal is in no condition to join a deep political crisis to the deep economic and social crisis to which it has descended. We would recede to a worse situation than that in which we find ourselves.

Parliament, through the respective parliamentary commission, can contribute to enlighten the Portuguese as to the demands with which Portugal will be faced in the post-«troika» period. It is decisive for our collective future that such demands are duly taken into consideration in party-political strategies.

On behalf of the Portuguese, it is essential to reach an enlarged political consensus that guarantees that, whatever the ideological and political connections, whichever of the parties is in Government, the Country, after the current cycle of the adjustment programme has been completed, will adopt policies compatible with the rules of the Budgetary Treaty that Portugal subscribed.

On another hand, a wise and careful analysis of the Portuguese situation leads us to conclude that the sustainable consolidation of the public accounts and the preservation of social cohesion urgently demand measures for the re-launching of the economy.

It is normal to subdivide a programme of financial stability in three stages: the first is that of emergency, when swift and energetic action is necessary to check the haemorrhage and save the patient; the second stage is to implement the reforms that promote the clearing of the public accounts and the competitiveness of the economy; the third stage is the taking of measures to re-launch the economy, in order that the cure does not end up by killing the patient.

In spite of the difficulties and the need to pursue efforts in the field of budgetary consolidation, it is not possible to postpone Portugal’s implementation of the third stage, Without economic growth, there will be no long term sustainable budgetary consolidation.

Amongst the relevant factors for economic growth, I underline the competitiveness and the stability of the tax system, due to the role it can perform in capturing investment.

On another hand, it would be convenient that the State Budget should not continue to be an instrument to create rules for deep changes in the tax system, and should only carry out adjustments in line with the environment. Juridical security and fiscal competitiveness and predictability are decisive components for the decisions of the economic agents and thus for the Country’s growth.

Members of Parliament,

After some initial wavering, the European Union is starting to understand that the issues occurred in several countries affect everyone and that the Euro Zone crisis is not solely resolved with imposing austerity policies and the application of sanctions to States with excessive deficits.

In the last two years we have witnessed a strengthening in the coordination of economic and structural policies in the member States, which has its main mechanism in the European Semester. In this field, and considering the decisions of the Council of Europe, it is possible to forecast very significant advances in the medium term.

The European Central Bank, in its turn, announced its availability to intervene without limitations in the secondary markets of the sovereign debt of countries subject to aid programmes. This was a decisive marker to combat the speculative attacks that have been undermining the Euro Zone.

I have insisted on an item of crucial significance: the European Central Bank must more than ever assume itself as a true Central bank, becoming configured, as well, as a «lender of last resort».

The entry into force of the Single Supervision Mechanism is being awaited, the first step for the construction of a European Banking Union, whilst the setting up of a common debt instrument is late in being inserted in the European agenda, although recognized as a determining response to subdue the Euro Zone crisis.

In spite of recent developments, we have to recognize that this crisis showed up several weaknesses in the Union. In addition to the slowness and lukewarm response to the euro crisis, the biggest failure of the European Union was – and still is – in the promotion of economic growth and employment.

In 2012, the Euro Zone recorded a 0.6 percent reduction in the product and estimates indicate that the situation continues receding in the current year of 2013.

The unemployment rate in the Union increased successively in the last five years. There are 26 million unemployed, of which 5.7 million are young people.

The Euro Zone is going through the fifth consecutive quarter of reduction in the product, in the sixth consecutive quarter of reduction in internal demand, and in the seventh consecutive quarter of reduction in investment.

We can state that the European Union has failed in the coordination of economic policies. When those countries that are undergoing public deficit consolidation programmes are affected by contracting policies in other Member States, it is obvious that the consequence will be a recession in the whole of the Union, as is now the case.

In its turn, the Multiannual Financial Framework 2014-2020, approved by the Council of Europe in the past month of February, although having placed Portugal in a better situation than that which resulted from the initial proposals, does not in any way correspond to the European response demanded by the economic and social situation of the Union. The European Parliament has clearly anb unequivocally denounced this insufficiency.

It should equally be noted that the European Union and the International Monetary Fund, within the concept of the adjustments negotiated with countries going through difficulties in obtaining finance, did not take into account the recessive impact of the proposed measures and their consequences.

The international financial institutions, making use of their persuasive strength as creditors, will have persuaded the governments of countries in difficulties to apply measures that infringe basic equity rules, rules that are the bases of contemporary democratic societies. Threatening cohesion and social peace, these disturbed the stability of constitutional democracies and generated new anti-European feelings.

In fiscal terms, essential principles of fairness were forgotten, demanding differing sacrifices from citizens that are in similar situations as to the relevant factors of well being. The Eurogroup’s decision on Cyprus was the most recent case, with ruinous consequences for the adhesion of citizens to the European project.

The Union celebrates, in 2013, the «European Citizen’s Year». It is time for the European institutions and leaders to listen to the citizens’ voices. We have, once and for all, to re-conquer the confidence of the Europeans in a project that ensured peace during decades and that should guarantee a balanced development amongst the several Member States, with respect for the principles of justice and human dignity.

Currently, with 26 million unemployed, Europe has placed in question the dignity of a very large number of human beings. It is urgent that this situation is overturned, it is urgent to rethink the course that has been followed to vanquish the euro crisis.

Approximately 40 years ago, Portugal showed the world how it is possible to change a regime without violence. Now, with our sense of responsibility, we should contribute towards the construction of a Europe with greater solidarity, a fairer and more united Europe.

That was the dream born in April 1974. For the future of the new generations the time has come to make it come true.

Thank you very much