More cuts as Portugal's next bailout payment is approved

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More cuts as Portugal's next bailout payment is approved

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Portugal has been given the go-ahead to receive the next installment of a bailout loan. Following a review last week, EU and IMF lenders have approved the two billion euro payment.

However, it means years of austerity for people living in Portugal – especially pensioners and public sector workers like Maria Graca Ramos. After eighteen years as a bus driver for a partly state-owned company, Ramos is supplementing her income by driving a taxi as well.

Her salary of around 1,000 euros a month for driving the bus has decreased by 25% in two years. She spends most of the money paying her mortgage and is now struggling with her childrens’ university fees.

Nevertheless, Ramos, 53, is optimistic: “I still hope that this will all get better, or at least for my life to get better. It’s this hope that gives me the courage to keep going,” she said.

Portugal’s government has committed to wider deficit reduction, meaning cuts of 4.8 billion euros over the next two years. Some 30,000 public sector workers could lose their jobs and there are proposals to raise the retirement age.

“The big effort made by the government is so they can go back to the markets and so they can finish the bailout programme. But from the point of view of Portuguese society, the success of the government’s measures could be viewed as a failure by Portuguese people because of falling standards of living,” said analyst Antonio Costa Pinto.

Unemployment in Portugal is now 17.5% and a third consecutive year of recession has been forecast. People are angry with the two years of tax increases and pay cuts they have had to endure in order to get the bailout package.