Mon, Apr 08, 2013 - Page 15 News List

Ruling has negative effect: Portuguese government

Bloomberg

The Portuguese government said a constitutional court decision to block planned cuts in salary payments to state workers and pensioners has “negative effects” for the country.

“The government doesn’t agree with the constitutional court’s interpretation of the constitution in its ruling about some norms of the 2013 budget,” Luis Marques Guedes, the secretary of state for the presidency of the council of ministers, said in Lisbon on Saturday. “The constitutional court’s decision places serious difficulties on the country to comply with the goals and budget targets it has to meet.”

The government respects the court’s decision, he said.

Guedes also said the court’s decision has an effect on the country’s international credibility and comes before an “important” EU meeting in Dublin this week. Portugal has been seeking an agreement from its European partners to extend the maturities of its aid loans, he said.

The ruling by Portugal’s highest court that the measures are unconstitutional means the government may need to find alternative savings to comply with the country’s 78 billion euro (US$101 billion) aid plan from the EU and the IMF.

Portuguese Prime Minister Pedro Passos Coelho is battling rising joblessness and lower demand from European trading partners, while he cuts spending and raises taxes to meet the terms of the bailout. The government on March 15 announced wider deficit targets as it forecast the economy would shrink twice as much as previously estimated this year.

The prime minister met late on Saturday with Portuguese President Anibal Cavaco Silva, Guedes said.

Cavaco Silva reiterated that the government is in condition to complete its term in office and said he is committed to ensuring that international agreements are honored, according to a statement posted on the presidency’s Web site after the meeting.

Passos Coelho was scheduled to address the nation last night over the crisis triggered by the court ruling.

The ruling, delivered by a panel of 13 judges, said the government’s budget measures singled out public workers and pensioners and hence were contrary to equality guarantees written into Portugal’s constitution. Private sector workers are not subject to the measures.

Portugal forecasts that debt will peak at 123.7 percent of GDP next year.

Additional reporting by AP

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