The “alerts” started in 2016, in press articles; in 2019 “many of them” were “cast” and went to vote in the election program of the PSD [nas eleições PS obteve 36,34% do sufrágio, PSD conseguiu 27,76%]; and in 2022 they again faced new legislative elections [PS ganha maioria absoluta com 41,37% dos votos, PSD com 27,67% perde dois deputados] and new evaluation.
the CChronicles of a stagnant landby Joaquim Miranda Sarmento, 45 years old, PSD parliament leader, assistant professor of finance (with aggregation) at ISEG – Lisbon School of Economics and Management, University of Lisbon, are, in the words of the former economist at the Ministry of Finance ( 1999 -2010), UTAO adviser (2010-2011) and former economic adviser to the President of the Republic Cavaco Silva, the “reality of the last two decades” and the “reason” for his “public and political intervention”.
And the reason, he explains, is based on “two facts” that justify and occupy “a large part of the chronicles”, now published in a book, and two election manifestos of the PSD. The first is “the fact that Portugal’s main problem is the lack of economic growth. The country has been at a standstill for 20 years, it has an uncompetitive economy, low productivity levels. And this economic stagnation has consequences: income stagnation, low wages and the fact that we were overtaken by several countries in Eastern Europe, which were much poorer than Portugal 20, 25 years ago”.
The second is “the fact that in recent years, especially between 2016 and 2019, the illusion has been created in the country that government accounts were in balance and that we had achieved balance in our public finances”. Correct accounts? “Wrong. And I’ve tried to show over the years that the reduction in the deficit that took place was cyclical and the result of a series of external factors, namely the monetary policy of the ECB, which led to a significant reduction of expenditure on interest and the increase in dividends and IRC of the Bank of Portugal On the other hand, there was a very favorable situation that allowed an increase in tax revenue and an increase in the tax burden, as well as a reduction in public investment and an increase in captivity”.
And then? “Now it is clear, and this has been shown, they will, they have, reflect the very significant decline, in general, of public services”.
Joaquim Miranda Sarmento therefore believes that after so many years of “warnings”, no one today doubts that the “deficit reduction was cyclical, illusory, that the sovereign debt problem had not been solved. And that Portugal had to continue to it will reduce its public debt at a faster pace, because in the next crisis, the public debt, as it was, would be a very important constraint.”
Evidence of this, he argues, was the “fact” that during the covid phase, “Portugal was one of the countries least supportive of families and businesses”.
The “truth”, argues the former economic adviser to the President of the Republic Cavaco Silva, is that already “these features of stagnation have been aggravated and that, with the pandemic and now with the whole situation of the war in Ukraine and this context of inflation, what were the problems of 2016 and what could have been mitigated by the beginning of 2020, years of a very favorable situation, has worsened.It is the total deterioration of public services: health care, education, justice, even defense. points and structural problems of the Portuguese economy”.
The evidence of “reality”, which was covered by “an illusion” between 2016 and 2019, is “in sight” as the Portuguese economy remains uncompetitive, continues with very low growth prospects, even with the PRR (Recovery and Resilience). And after the end of the PRR, see that the government’s own projections are that the Portuguese economy will grow again below 2% per year. Which of course is too little. Having balanced public accounts through an increase in tax revenue – through an increase in the tax burden – and captivations is not sustainable.”
According to the man who coordinated the election campaign of the PSD program with David Justino (former deputy minister of education in the Durão Barroso government, former adviser to President Cavaco Silva on social affairs and former vice president of Rui Rio), “bottlenecks” in the Portuguese economics that are “perfectly identified” and supported by “various studies”.
Starting, he says, with “the high cost of context and bureaucracy; a tax system that is complex and unstable, that has very high compliance costs and a high tax burden; a labor market that is rigid; a justice system that is very slow, time consuming and costly; the low connection between research and development and then innovation and value creation in companies”.
And then, he points out, the three “characteristics” that are “overarching problems” in Portuguese companies: “Small size, high debt and low degree of internationalization, both in export and foreign direct investment.”
And here Joaquim Miranda Sarmento says there is a way to “mitigate these problems” and “get out of the stagnation with a reformist government.” If? Implement a series of structural reforms in these bottlenecks: reduce bureaucracy, improve justice, improve the labor market, create a simpler and cheaper tax system, promote more innovation in companies, create mechanisms for companies to increase their capitalization, create incentives for companies to grow in size, namely through mergers and acquisitions, giving them incentives to increase their internationalization”.
If it’s that simple, why not do it? The parliamentary leader of the PSD goes back almost 30 years to explain “the two decades” of stagnation and explains the three days out of four that have been under socialist rule since the first government of António Guterres – in 47 years , since the constitutional government of 1976, in total the PS has been in government 52.4% of the time.
“In the last 28 years, from 1995 to now, the PS has ruled for 21 years and the PSD for 7 years, but the PSD has always been in financial distress. First, between 2002 and 2004, with the first excessive deficit procedure taking place in late 2001 it was Portugal. And then, between 2011 and 2015, with the troika program. What I notice is that the PS is not primarily concerned with structural reforms. The PS does not want to implement these reforms. They are always part of social support policies,” he says.
How do you solve “two decades of stagnation”? “It’s not something you do from one year to the next. A series of structural reforms take time to implement and then take effect. The average over the last 20 years of growth is less than 0.5% per year And despite the PRR’s relentless injection of money on top of other European funds, the government is forecasting growth of around 2% in 2026. If nothing is done now, it will be a lost decade of further impoverishment and inequality of poverty before social benefits, was 37% in 1995. In 2019 it was already 43%”.
How long does it take? “A government in four years, with stability, would manage to grow the economy at about 3% growth. Eight years would be ideal for a reformist government. And we have the parallel with the governments of Cavaco Silva: ten years that transformed the country in an extraordinary way,” he guarantees.
Source: DN
