Portugal

Portugal's Constitutional Court on Thursday struck down planned cuts in retirement benefits for public employees, its fifth ruling this year against government measures to satisfy international bailout lenders and regain full access to financial markets, the Wall Street Journal reported today. The court's repeated rebuffs have become the biggest obstacle to government efforts to narrow a budget deficit and prove to creditors and investors that its accounts are sustainable.

A digital clock inaugurated by Paulo Portas, Portugal’s deputy prime minister, has begun marking the six-month countdown to Lisbon’s planned exit from its €78bn bailout programme. But a senior International Monetary Fund official has warned that it could take at least another 10 years to address the country’s deep-rooted structural challenges.

Banco Espirito Santo is set to become the first Portuguese bank to raise subordinated debt capital in four years later on Thursday, marking an important step in the country's recovery from a bailout, Reuters reported. Around 300 investors placed orders worth over 3 billion euros for the 10-year Tier 2 capital issue which is not callable for five years. It is set to offer a yield of 7.125 percent, satisfying investors demand for high returns and appetite for weaker European credits.

Portuguese lawmakers on Friday approved an unpopular austerity package for next year, as the country seeks to regain investor confidence to exit its €78 billion ($105 billion) international bailout in June, The Wall Street Journal reported. Outside parliament, several thousand people protested against what will be another year of sharp spending cuts and high taxes. But there are signs of fatigue among protesters, and demonstrations have been small in recent weeks.

Portugal’s government is stepping up its fight against tax evasion, investing in new technology and almost doubling the number of tax inspectors even as it tries to cut costs with state workers, Bloomberg reported. Paulo Nuncio, secretary of state for fiscal affairs, is betting on a mandatory electronic invoicing system for all businesses and expanding the ranks of tax inspectors to 3,000 by year-end from 1,700 to ensure companies, wealthy individuals and hard-to-tax enterprises such as hairdressers pay all their taxes.

Robed in black and accustomed to the quiet of their Lisbon chambers, the 13 judges of Portugal’s constitutional court have found themselves propelled unexpectedly into the cut and thrust of high European politics, the Financial Times reported. Defenders of the inviolability of national laws for some, enemies of reform to others, the seven men and six women have become critical to the success or failure of Portugal’s €78bn bailout programme and, by implication, the resolution of the eurozone crisis.

Portugal's government on Tuesday unveiled the harshest package of spending cuts so far under its 2½-year-old bailout, calling for reductions next year in pensions and public employees' wages to reach the budget-deficit target agreed to with its international lenders, The Wall Street Journal reported. While next year's budget is expected to be approved in parliament, where the center-right government has a majority, the €3.2 billion ($4.3 billion) in planned cutbacks could face resistance in the Constitutional Court, which has struck down several previous austerity measures.

Portugal has passed the latest test of its compliance with the terms of its bailout and qualified for around 5.5 billion euros ($7.5 billion) in further funding from creditors, officials said Thursday, the Associated Press reported. However, the creditors who lent Portugal 78 billion euros in 2011 refused the government's request to ease next year's deficit target to 4.5 percent of gross domestic product, Deputy Prime Minister Paulo Portas said. The goal remains 4 percent.

Portugal begins a new round of talks with international lenders on Monday amid signs that eurozone governments will strongly resist pressure from Lisbon to relax fiscal targets as the country approaches the final stages of its €78bn bailout programme, the Financial Times reported. A successful outcome to the negotiations is seen as vital for Portugal to regain the confidence of international investors following a damaging political crisis in July and a third intervention by the constitutional court restricting the scope of government reforms.

Portugal is clearly hitting its export stride, a step that economists view important not only in a Portuguese rebound but in the revival of other parts of Europe. Small businesses cannot on their own mend Portugal’s long-suffering economy. But as many of the country’s businesses have accepted that true growth must occur beyond the country’s borders, the economy is beginning to improve, the International Herald Tribune reported.