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Moscovici: Portugal economy sees progress but must continue reforms

Published on 31/03/2015

Portugal's "extraordinary efforts" towards structural reforms have paid off but more needs to be done to get the economy back on track, European Union Economic Affairs Commissioner Pierre Moscovici said.

While Portugal has returned to growth after exiting its EU-IMF bailout last year, it has not been felt by many Portuguese, who are tired of cuts to spending and tax hikes.

“The recovery is fragile, especially in employment, and there is no room for complacency,” Moscovici said in an interview published Tuesday in the Diario Economico newspaper.

“There are ongoing reforms, but we still need to do more,” he added, in particular with regards to country’s debt that remains “very high”.

Portugal’s public debt increased in 2014, reaching 130.2 percent of gross domestic product (GDP) against 129.7 percent the previous year.

Unemployment rose again in February, to 14.1 percent against 13.8 percent in January, according to figures released on Monday.

Asked whether the Portuguese government will be able to reach its target of reducing its deficit from 4.5 percent to 2.7 percent of GDP this year, Moscovici said he “hopes that will be achieved.”

“We believe it is still possible to meet that goal this year,” he said, adding that it was too early to determine whether any additional measures would be required.

The International Monetary Fund (IMF) is less optimistic, forecasting a deficit of 3.2 percent of GDP this year.

In May last year, Portugal exited its 78-billion-euro ($83 billion) bailout extended by the EU and the IMF in 2011 in exchange for reform and austerity measures.

Portugal’s economy returned to growth in 2014 with an expansion of 0.9 percent, after contracting by 1.4 percent the year before, but the population remains disgruntled over the centre-right government’s belt-tightening.

Earlier this month, schools, hospitals, courts and state offices across Portugal were hit by a day-long strike called by civil servants fed up with austerity-linked salary and job cuts.

EU’s embrace of austerity has been unpopular in parts of Europe most affected by it.

Greece’s anti-austerity party Syriza won elections in January on a wave of discontent about economic cuts imposed during an economic crisis. This trend led to its ally in Spain — Podemos — also gaining popularity although a third place showing in a recent regional vote dented their momentum.