The Portugese government has run into its first political troubles since coming to power four months ago. New finance minister Fernando Teixeira Santos has been sworn in just hours after his successor resigned, officially for personal reasons. However Luis Campos e Cunha has been criticised for his performance – at a time when austerity is the watchword – for drawing salaries for both his old and new jobs.
Prime Minister José Socrates is refusing to accept there is a crisis; “We are going to continue with our policies. Our target is economic growth, and to do that we have to attack the deficit problem, and we have to do that to defend the welfare state. It’s the same policy, but with a different minister,” he said.
The new man takes a similar line; “There will be no tax rises, that’s a clear promise. We must concentrate our efforts on public spending. We must continue rigorous policies to reduce this.” As it is Portugal will have to trim its budget deficit of 6.2 percent of GDP by a whole 1.5 percent next year, which will mean considerable belt-tightening. It will also need to be well-managed, as the economy is only weakly returning to growth.
Complicating matters is the country’s worst drought in 60 years, which could cost agriculture billions of euros, as the raging fires create further costly damage.