Portugal’s PM accuses IMF of hypocrisy

Portugal’s prime minister on Friday accused the International Monetary Fund of hypocrisy, saying the world body is pressing for more austerity while acknowledging that the spending cuts are too drastic.

Pedro Passos Coelho’s remarks came after IMF chief Christine Lagarde said in Brussels on Tuesday that creditors have required Portugal and Greece to undertake too many reforms too quickly.

Passos Coelho said he was “surprised” by Lagarde’s comments because “for two years, we have been asking for relief from the adjustment programme in terms of budgetary targets”.

“The former (finance) minister Vitor Gaspar said one day, with regards to similar declarations from Madame Lagarde, that there is a certain hypocrisy on the part of these international institutions.

“I am not hiding the fact that Mr Gaspar was right… if the director-general of the IMF acknowledges that there are errors the IMF should act consistently and meet the Portuguese government’s requests for greater relief,” he said.

Lisbon in September sought in vain to get its “troika” of international creditors — the IMF, the European Union and the European Central Bank — to ease its 2014 public deficit reduction target from 4 percent to 4.5 percent of GDP.

The EU and IMF granted Portugal a 78-billion-euro ($107-billion) bailout in May 2011, with the eurozone country obliged to undertake tax hikes and spending, benefit and wage cuts in order to unlock the funds.

Passos Coelho has until now been doggedly seeking to meet the lenders’ targets, but he now said that the IMF chief’s remarks were “inconsistent with the decisions taken during negotiations with troika experts”.

The troika is due to conclude next week a new audit into plans by Lisbon to further slash spending. The progress report would have a bearing on whether the creditors would release a new tranche of aid worth 2.7 billion euros.