Portugal will do ‘whatever it takes’ to avoid second bailout
Portugal will do everything it can to avoid the need for another international bailout, the country's recently-appointed economy minister told CNBC on Monday.
"We are doing whatever it takes, sometimes with strong internal costs," António Pires de Lima, who took office in July, said in an exclusive interview. "But there is strong commitment, almost an obsession, to recover our sovereignty, and that will be only possible if we end up this assistance program in 2015."
Pires de Lima's interview with CNBC came after Prime Minister Pedro Passos Coelho described Portugal's 2014 budget as the country's "last sacrifice", having enforced the strict austerity measures which were conditions of its bailout by the European Union (EU) and the International Monetary Fund.
"Portugal is out of recession and is growing again and that is clearly assumed in the budget for 2014, also with the stabilization of employment. But on the other hand there are still hard measures that have to be implemented in order to control and reduce the public spending. And this is a very important issue, because we want to reduce public spending in order to be more aggressive on the fiscal side," Pires de Lima said.
He added that the government planned to reform Portugal's corporate tax regime, making the country one of the most competitive in the EU for corporate tax. Pires de Lima said the government hoped to start lowering the rate — currently 31 percent — from next year, aiming to reach 17-19 percent by 2018.
However, Pires de Lima and the government have faced constant opposition to spending cuts: the administration has promised cuts of more than 4 billion euros ($5.5 billion) by the end of next year in order to meet budget deficit goals, but there has been resistance from business groups, workers' unions and the Constitutional Court.
The Constitutional Court has thrown out several measures over the past year, such as a bill in August that would have effectively allowed the state to fire public sector workers. The court could still shoot down other measures, such as lower pensions and higher working hours in the public sector.
Pires de Lima said that the government was committed to its goals and would "manage the Court's decisions".
"There is a clear commitment from the government to which I belong... to achieve a target of 4 percent deficit in 2014, to accomplish all the commitments and compromises that were negotiated in the eight and nine evaluations of the 'Troika', regardless of the decisions of our courts," he said.