And could it be a job for the special one?
A republic since 1910, Portugal elects its President every five years and the next election is not until 2016. But EconoMonitor floats an interesting idea, while considering the possibility of a monarch for the former kingdom.
However when the list of Presidents of the Republic is reviewed, Portugal shows very little choice. Most often a former Prime Minister runs for President of the Republic and gets elected. Would it be possible for an outsider to become President of the Republic, let’s say for instance for the late José Saramago or for coach José Mourinho (arguably Portugal’s best-known non-political individuals internationally).
For instance out of Portugal’s four Presidents of the Republic inaugurated since the Carnation Revolution in 1975, two have previously been Prime Ministers, notably Mario Soares and the current President Anibal António Cavaco Silva.
We note it because Eurointelligence have been reading the local press and spotted a Jornal de Negocios analysis of constitutional court decisions. It turns out that the court is not quite the absolute austerity road block after all during the last three years.
The journal found that in total, the judges validated government initiatives worth €7.7bn, or 82% of the proposals that were submitted to the court. Over those three years, the government had to give up or reshape only 18% of its plans, or €1.7bn. Two of the four blocked measures – transfer cuts to pensioners and civil servants with more than €600 per month – forced the government to find alternative revenue sources. The other two – the so-called “rehabilitation” and the extraordinary tax on sickness and unemployment – had been reformulated.
Indeed, the court on Wednesday ruled the government’s move to extend the working week for civil servants from 35 hours to 40 was constitutional.
The court also rejected the notion that extending the working timetable somehow violated the constitutional provision of trust in the state even while accepting that the consequences might “frustrate legitimate and fundamental expectations of citizens.”
A decision on reform of the public pension system is still to come, but the situation appears to be a long way from the crisis of support for austerity that nearly bought down the government last year.
Time, perhaps, to think about some of the more optimistic scenarios for funding Portugal next year once the bailout programme expires? BoAML last month put out this helpful decision tree.
The greatest uncertainty is a potential negative ruling from the constitutional court if it is asked to review the pension convergence law and/or the Budget law. However, we do not anticipate any action on pensions before the end of November or on budget law until late December/early January. Another rejection of an important measure five months (or less) ahead of the program exit would test the differences between the two coalition parties in finding replacement measures and could call into question whether the government can structurally reduce expenditure without the support of the main opposition party.
Given these risks, the large additional funding needs for 2014, and the still sub investment-grade rating of Portugal, it appears to be clear that the country will have to resort to either a precautionary credit line from the ESM or another full program (see our scenario in Chart of the Day). In almost the best-case scenario, Portugal could get an Enhanced Conditions Credit Line (ECCL) but make little drawdowns.
More in the usual place.
Related Links:
Portugal: on the verge of a second bailout? – FT
Successful reforms mean no second Portuguese bailout – Letter to the FT
