http://www.imf.org/external/pubs/ft/scr/2011/cr11363.pdf
© 2011 International Monetary Fund December 2011
IMF Country Report No. 11/363
Portugal: Second Review Under the Extended Arrangement
The following documents have been released and are included in this package:
The staff report, prepared by a staff team of the IMF, following discussions that
ended on November 19, 2011 with Portuguese officials on economic developments
and policies. Based on information available at the time of these discussions, the
staff report was completed on December 7, 2011, and discussed by the IMF
Executive Board on December 19, 2011. The views expressed in the staff report are
those of the staff team and do not necessarily reflect the views of the Executive
Board of the IMF.
Letter of Intent*
Memorandum of Economic and Financial Policies*
Technical Memorandum of Understanding*
LOI & Memorandum of Understanding on specific Economic Policy Conditionality
(European Commission and European Central Bank)*
A Press Release summarizing the views of the Executive Board as expressed during
its December 19, 2011 discussion of the Staff Report*
A statement of the Executive Director for Portugal
* These documents will also be released separately and are also included in this report.
The policy of publication of staff reports and other documents allows for the deletion of
market-sensitive information.
Copies of this report are available to the public from
International Monetary Fund ● Publication Services
700 19th Street, N.W. ● Washington, D.C. 20431
Telephone: (202) 623-7430 ● Telefax: (202) 623-7201
E-mail: publications@imf.org ● Internet: http://www.imf.org
International Monetary Fund
Washington, D.C.
INTERNATIONAL MONETARY FUND
PORTUGAL
Second Review Under the Extended Arrangement
Prepared by the European Department in Consultation with Other Departments
Approved by Reza Moghadam and Martin Mühleisen
December 7, 2011
Executive Summary
Program status. On May 20, the IMF approved a SDR 23.742 billion (€26 billion) three-year
arrangement under the Extended Fund Facility (EFF) for Portugal as part of a joint financing
package with the European Union, worth €78 billion. The first and second purchases (total of
SDR 9.078 billion) under the heavily frontloaded arrangement were made on May 24 and
September 14, respectively. The third purchase, available upon completion of the second
review, amounts to SDR 2.425 billion (about €2.8 billion). All quantitative performance
criteria and all structural benchmarks for the second review were met, but the indicative target
on non-accumulation of domestic arrears was breached.
Recent developments and outlook. While the contraction in 2011 will be somewhat milder
than projected earlier, growth has been revised down to -3 percent in 2012, reflecting higher
fiscal adjustment and a weaker external environment. The 2011 fiscal target will likely be met
through the one-off partial transfer of banks’ pension funds, implying a smaller underlying
adjustment. Funding and credit conditions have tightened and additional bank recapitalization
needs will likely require recourse to the bank solvency support facility.
Program discussions and recommendations. The 2012 budget contains bold and concrete
measures, including significant wage cuts. Assuming stringent commitment control, it will
reverse the 2011 slippages. In the financial sector, close monitoring of bank’s deleveraging
plans remains essential to prevent an excessive contraction in private credit. Any public
recapitalization of banks needs to ensure that banks continue to be managed on a commercial
basis. On the structural side progress in reforming the labor market and opening up the
nontradable sector is off to a good start, but more effort is needed to improve competitiveness
in the absence of the previously agreed fiscal devaluation.
Risks. While progress against program targets has been good and there is strong commitment
to the program, headwinds are increasing, and perseverance is essential. The budget targets are
ambitious, putting a premium on strong program implementation; making serious headway in
improving prospects for growth requires concerted efforts to get past vested interest; and the
global market turmoil can potentially further weaken growth, funding conditions, and bank
credit. Overcoming these challenges require continued strong domestic political commitment
and euro-area wide efforts to address the broader sovereign debt crisis.
Mission. Discussions took place during November 7–18 with the Minister of Finance,
Governor of the Bank of Portugal (BdP), and other Cabinet Ministers; staff in the BdP,
ministries and government agencies, and banks. The staff team comprised P. Thomsen (head),
H. Samiei, P. Kunzel, S. Roudet, I. Vladkova Hollar (all EUR), S. Nardin (EXR),
A. Lemgruber (FAD), Y. Liu and D. Chew (LEG), A. Piris (SPR), and O. Frecaut and
C. Verkoren (MCM), and A. Jaeger and M. Souto (Res.Reps). Mr. Cardoso (OED) also
participated in most of the meetings.
2
Contents Page
I. Background .............................................................................................................................3
II. Recent Developments ............................................................................................................3
III. Outlook ................................................................................................................................9
IV. Policy Discussions .............................................................................................................12
A. Fiscal Policy ............................................................................................................12
B. Structural Fiscal Reform .........................................................................................13
C. Financial Sector Policies .........................................................................................15
D. Structural Reform ....................................................................................................17
V. Program Financing, New Measures, and Risks ..................................................................18
VI. Staff Appraisal ...................................................................................................................20
Figures
1.High Frequency Activity Indicators......................................................................................22
2. Balance of Payments ............................................................................................................23
3. Financial Indicators ..............................................................................................................24
4. External Debt Sustainability: Bound Tests ..........................................................................25
5. Debt Sustainability: Bound Tests ...................................................................26
Tables
1. Selected Economic Indicators—Program Baseline .............................................................27
2. General Government Accounts ............................................................................................28
3. General Government Stock Positions ..................................................................................30
4. Public Sector Financing Requirements and Sources ...........................................................31
5. Balance of Payments, 2008–16 ............................................................................................32
6. External financial Requirements and Sources, 2008–16 .....................................................33
7. Selected Financial Indicators of the Banking System, 2007–2011:Q2 ................................34
8. Monetary Survey, 2010–16 ..................................................................................................35
9. External Debt Sustainability Framework, 2006–16 .............................................................36
10. Debt Sustainability Framework, 2007–30 ...............................................37
11. Access and Phasing Under the Extended Arrangement, 2011–14 .....................................38
12. Indicators of Fund Credit ...................................................................................................39
Boxes
1. Transfer of Banks’ Pension Schemes ....................................................................................5
2. Progress with Structural Reform ..........................................................................................10
3. 2012 Budget—Key Measures ..............................................................................................13
Appendices
I. Debt Sustainability Analysis (DSA) .....................................................................................40
II. Letter of Intent .....................................................................................................................46
A1. Memorandum of Economic and Financial Policies...............................................48
A2. Technical Memorandum of Understanding...........................................................62
III. Letter of Intent (European Commission and European Central Bank) ..............................69
A1. Memorandum of Understanding on Specific Economic Policy Conditionality....71
3
-12
-10
-8
-6
-4
-2
0
2
4
6
8
10
2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1
Real GDP, Expenditure - Contribution to Growth (yoy percent change)
Consumtion (Public)
Consumption (Private)
Investment (fixed)
Changes in inventories
Exports
Imports
GDP grow th
92
94
96
98
100
102
104
106
108
110
112
92
94
96
98
100
102
104
106
108
110
112
1999Q1 2001Q1 2003Q1 2005Q1 2007Q1 2009Q1 2011Q1
Real harmonised competitiveness indicator:GDP deflators deflated
Real Effect Exchang Rate:ULC-deflated
Real Effect. Exchange Rate-CPI based
Source: European Commission Eurostat; European Central Bank; and IMF
International Financial Statistics.
I. BACKGROUND
1. Portugal’s program has remained broadly on track, but rising stress in Europe
is a serious risk.
End-September performance criteria (on the fiscal deficit, general government debt,
and external arrears) and structural benchmarks for the second review were all met,
although the indicative target on non-accumulation of domestic arrears was breached.
While expenditure slippages have opened up a large fiscal gap in 2011 and the endyear
fiscal target is likely to be met only with the help of partial bank pension
transfers, the projected structural adjustment in the fiscal balance in 2011, at around
3½ percent of GDP, is still significant.
The 2012 outlook for Europe has deteriorated substantially, with growth revised
down by 1¼ percentage points relative to spring forecasts. Substantially higher
capital requirements across Europe, coupled with cuts in exposure to the periphery,
are placing further pressure on banks and the flow of credit. Further negative
spillovers could significantly complicate domestic policy making.
II. RECENT DEVELOPMENTS
2. Economic adjustment has continued, but the contraction in output has been
milder than expected.
Output developments have been
dominated by the large decline in
domestic demand, which subtracted
almost 6 percentage points from year-onyear
growth in the second quarter.
However, delayed fiscal adjustment,
continued strong growth in exports (8.5
percent in real terms in the first half of
2011) and a fall in imports buffered the
impact on overall activity, and the Q3
flash estimate for GDP once again
surprised on the upside. Staff’s revised
growth forecast for 2011, at
-1.6 percent, is now 0.6 percentage points
above projections at the time of the
program request.
Unemployment rose to 12.4 percent in
Q3, from 12.1 in Q2, with youth
unemployment rising from 27 percent to
30 percent. The share of long-term
unemployed stands at 44 percent ( continua)
Sem comentários:
Enviar um comentário