Tuesday 9 March 2010 News
Plans unfold to reduce deficit
The Finance Minister Teixeira dos Santos began to elaborate on the government plans to deliver the requirements of the stability and growth pact which needs to be completed by 2013, saying that civil servants will have to accept pay increases below the rate of inflation until the 2013 deadline. The policy of strong wage restraint is being driven by the minority government with pay freezes this year, so that wage levels for civil servants will remain at 2009 levels and at best will rise below the rate of inflation over the next five years.
The rate of replacement of staff will also be reduced with one person being employed to fill every two vacancies with an overall target of cutting personnel spending gradually to 10 per cent of GDP by 2013 from last year's 11.5 per cent.
The draft guidelines of the stability and growth pact update for 2010-2013 predict the budget gap will fall to 6.6 per cent in 2011 and then to 4.7 per cent the next year before it meets the EU target of below 3 per cent in 2013. The government also hopes to raise €6 billion over the period by selling of state owned stakes in companies and privatisations starting with a saving of €1.2 billion this year.
The government also announced plans to cut welfare payments and proposes a tax increase for the highest earners, defined as those earning more than €150,000 per annum. The intention is to introduce a new rate of 45 per cent of income tax at this level.
Spending on military equipment will also be cut by 40 per cent over the next four years. Plans to construct new high speed rail links between Lisbon, Porto and Vigo in Spain will also be postponed to save money.
It was revealed yesterday that the number of people registering as unemployed and requesting benefit payment rose to 22,323 in January from 12,346 in December, nearly doubling as the government is preparing its plans for an austerity programme. Currently the numbers out of work are around 5 per cent or 563,000, of the Portuguese population, but more than one third of the number is not eligible for benefit payments.
A preliminary assessment of the damage caused by the recent bad weather, based on the estimates of Portugal’s public authorities, amounts to more than €1.5 billion euros, aside from the €1.4 billion needed for Madeira’s recovery programme following the devastation that occurred on 20 February. The total figure would come close to paying for a new bridge across the river Tagus according to recent calculations based on a project to build a high speed railway bridge. The terrible weather conditions have hit agriculture badly and have severely affected livestock farming and forestry in many parts of the country.
Infrastructure has also been badly hit with the cost of road repairs, communications links, electricity supplies and gas distribution also suffering serious damage. The tourism and hotel industry is also counting the cost of lost bookings and cancellations. The mini cyclone which hit the Torres Vedras and surrounding area destroying greenhouses and other buildings is also factored in to the costings. In Porto, damages have been estimated at €3.7 million due to damage caused by heavy rains and flooding. The Algarve has suffered around €15 million of lost production in the citrus fruit production and the hurricane-like conditions damaged restaurants on Praia de Vau on 24 February.
An environmentalist of the Left Bloc, Mendes Bota, has questioned the government about the management of a landfill site at Cortelha in the municipality of Loulé. Mr Bota visited the site and found what he described as considerable environmental damage caused because the structure was unprepared to meet the demands of the recent heavy rain. He also said that there was a large amount of solid waste running adjacent to the site which was being deposited in a river causing pollution. Mr Bota demanded to know what steps were being taken to remove the waste and prevent future problems of pollution occurring.
A baby whale was washed up on a deserted beach near Quarteira on Sunday in an advanced state of decomposition. The whale estimated to be 1.5 metres long and weighing around 50 kilograms was the second to be washed up on an Algarve beach in the past few days. Many locals came to the beach to take photos when a Bearded whale of around ten metres was washed up on Friday and is being examined to find the cause of death. Experts said that sometimes whales fall asleep on the surface of the sea are hit by boats.
Strike action
Civil servants began on Monday a 48-hour strike over redundancy pay cuts.
A new system to come into effect in April will cap redundancy payments for those who are laid off and take voluntary redundancy. The pay-off cap is at £60,000 and is designed to save about £500m. At present redundancy pay depends on length of employment with every year worked earning one month’s redundancy payment.
The Public and Commercial Services Union, the fifth largest union in the UK, claims that members could lose one-third of their entitlements under the new scheme. The government claims that other civil service unions have said that the changes are fair.
Cabinet minister Tessa Jowell said that fewer than one in five union members had voted to go on strike; this was about 10 per cent of the total civil service personnel.
Areas likely to be affected by the strike are government departments, courts, ports, employment and tax centres, emergency police call centres, and museums.
At the time of going to press, turn-out was reported by the union to have been 200,000 while the government claims it was 81,000. Most offices were open. The union had forecast additional strike action before the general election, but that may be tempered by low numbers of participants.
Positive IMF prediction
The International Monetary Fund has predicted that the financial crisis in Greece is not likely to spread to other eurozone nations. “There’s no reason,” it said, to expect Portugal and Spain to have to resort to external assistance.
Last Friday Germany pledged support for Greece in helping it face its debts. This was reinforced later by France which said it would stand “resolute” behind Greece. As a result the euro, which had weakened over Greek debt fears, rose 0.3 per cent early Monday.
The IMF has said that it would be prepared to help Greece, but to-date Greece has turned only to the European Union. An IMF spokesperson said: "We have a problem with Greece. We don't have a problem with Spain to date. The eurozone has to deal with the Greek problem. They are doing this. No one knows what's going to happen tomorrow morning but there's no reason why the spillover to Portugal or to Spain will take place."
In its efforts to cut its public deficit, Greece has said that it does not want direct financial assistance from other countries, but instead needs help to make less expensive loans from the international markets. Because of its high debts, interest rates are higher for Greece than most other European countries.
European leaders are concerned that international speculators’ fears and actions are only exacerbating Greece’s dilemma. Their show of solidarity is, in part, to calm the situation.
Deaths and damage from earthquake
A 6.0 grade earthquake his hit eastern Turkey left at least 57 people dead.
More than 40 aftershocks, some measuring as high as 5.1 and 5.5, followed the quake which struck in the early hours of Monday. A number of villages in the area suffered damage when houses collapsed.
Cement and stone buildings withstood the tremor better than the many which were constructed of mud-bricks. Rescue workers and soldiers have been digging in the rubble where it is feared a number of people were trapped.
Fifty people have been taken to hospital. Among them are people who were injured when they jumped in panic from windows. Residents have been warned not to return to damaged homes. The government disaster centre and the Turkish Red Crescent have erected tents and are distributing food and blankets.
The North Anatolian fault line runs through Turkey and earthquakes are frequent. Some people, particularly those in seismic areas, say the government has taken no action to strengthen the poor quality housing or to educate the population on best ways to react to tremors.
Deadly riots
Clashes over the weekend in the city of Jos are now believed to have left 500 people dead, including many women and children.
Nigerian officials say that three villages near Jos, inhabited mostly by Christians, were attacked by people wielding machetes. It is thought the attacks were motivated by revenge for the killing of 200 people in the area earlier in January when hostilities erupted between Christians and Muslims.
Witnesses say that many villagers were hacked to death and mud huts were set alight. Mass burials began on Sunday, with scores of bodies laid out on the streets for more burials yesterday.
The area is now reported to be calm. Troops have been deployed and a number of arrests made.
The city of Jos is divided between Christian and Muslim areas and is directly between the essentially Muslim north of the country and the primarily Christian south. Deadly riots have occurred before, in 2001, 2008 and again this year.
Analysts say the tensions arise not only from religious differences but also from different ethnic groups and the need for land and resources.
A realistic account of the numbers who have perished is difficult to obtain owing sometimes to the desire to quell future reprisals and because victims are buried quickly.
