Grexit: What impact for Portugal?

in News · 18-06-2015 13:49:00 · 1 Comments
Grexit: What impact for Portugal?

While talks between Greek government negotiators and the EU continue to drag on with no
immediate signs of a settlement, news emerging was pointing to a possible
extraordinary summit being held in Brussels on Monday. While both parties have stood their ground, Portugal has continued with business as usual with another successful short-term debt auction being staged by the treasury department on Wednesday.

The possible far-reaching implications of a Greek eurozone exit on the Portuguese economy has this week become a focal point on a domestic level, with the Government moving to assure investors it is ready and prepared for any eventuality.

Ratings agencies and analysts here have also indicated that Portugal is much better prepared to front up to contagion resulting from a Grexit than back in 2011, and the country’s “good pupil” status in the EU is likely to see Lisbon given immediate and unconditional support from the Eurogroup and the European Central Bank as these institutions move to avoid the single currency from crumbling any further and the effects of the Greek exit spreading to larger economies such as Spain.

The final deadline for a compromise between Greece and the Troika (European Union, International Monetary Fund and European Central Bank) will arrive on 30 June, when Athens will have to repay an IMF loan worth 1.6 billion euros. Greece has already said it does not have the money and would only be able to avoid a credit default with the help of its economic partners.
The possibility of an exit from the eurozone has resulted in Greek account holders withdrawing a billion euros from banks on Tuesday alone, while markets in Athens fell to three-year lows on Thursday.
Observers in Portugal have meanwhile pointed to the country likely suffering the most collateral damage in the wake of a possible Greek default, leading the Prime Minister to provide some insight into the mid-term state of the country’s accounts.
“We are in a position to say that the Portuguese Treasury will be able to face any type of market volatility until the end of the year and we have good reason to believe that in the coming months, we will be in a good position to see through the first half of 2016”, Prime Minister Pedro Passos Coelho said this week.

He stressed that “should something serious happen to Greece, Portugal will not be the next to fall”, adding: “There is a country which is once again on the brink of bankruptcy and after almost four months of negotiations, there is no solution to the problem. I see this as being, in the very least, extremely disturbing.”

The Prime Minister did however say that Portugal was, unlike previous years, now in a position where it could face a period of sustained disruptions to the markets, saying “this should help reinforce the trust in us.”

Despite the extensive sacrifices imposed on Portugal since 2011 by the bailout Troika, Passos Coelho said Lisbon would not derail any proposed deal with the Greeks, even if that meant Athens would escape some of the harsh measures previously imposed on Portugal.

“It is desirable for both Greece and the eurozone that any Greek default is averted and this means that Portugal will not place any obstacle in the way of an agreement being reached.”

Earlier in the week, Portuguese Finance Minister Maria Luis Albuquerque had adopted a slightly tougher stance when she told a conference that a 28 member-state Europe should not be placed in danger due to the interests of just one country.

News also emerged on Thursday that the opposition Socialist Party (PS), favourites to win the October general elections, have prepared a scenario in the event of Greece leaving the euro.

According to a macro-economic document prepared by the PS, a Greek exit would “inevitably raise question marks over Portugal remaining in the eurozone.”

In details revealed by the Diário de Notícias (DN), the Socialists also predict that a Greek-free eurozone would cost the state’s coffers more than 15 billion euros in the coming four years, while growth would slump from an estimated 2.6 percent per annum to a near stagnant 0.5 percent.

The Socialists also estimate that it will be impossible to bring unemployment down from its current figure of 13 percent, while forecasting that public debt will rise to 135 percent and anticipating a deficit that will rise to 4.6 percent of GDP by 2019.

While the party has raised the extreme possibility of Portugal having to fall on its own sword and leave the euro, it has not made public any scenarios post-leaving the single European monetary unit.

But in comments to DN, the Portuguese analyst for ratings agency Moody’s has provided some room for optimism, saying this week that Lisbon is better prepared for a Greek exit than it was when it sought its bailout four years ago.

According to Kathrin Muehlbronner, “Our rating reflects a risk of contagion which is much lower than it was in 2011”, a position reflected by a number of notable Portuguese economists last week.


There is almost no economy in Portugal , and all the future workers and tax payers have left for EU countries and Angola etc , so what future is there .
Politicians and the EU are only interested that the IMF and other lenders get their money back , populations will be the sacrifice, and politicians will go free .

By Caver38 from Other on 24-06-2015 04:43
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