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Augusto Santos Silva explains Portugal's successful exit from the crisis

Portugal's Foreign Minister explains how the country, Europe's weakest link two years ago. has successfully emerged from the crisis.

Is there a Portuguese economic miracle?

I don't think so. There is no miracle but the fruit of the efforts of a constant policy. The 2017 public accounts will be closed with a deficit of 1.4 % of GDP and a very positive primary balance. We have emerged from the excessive deficit procedure. We have revived exports, achieved 2.6 % of growth and halved unemployment (to 7.8 % in December 2017, editor's note). We now need to stay the course.

You've benefited from a favorable cycle...

Yes, undoubtedly, but we've managed to make the most of it. We are aware of a cyclical effect, and we need to prepare ourselves for the shock of a possible change of cycle. That's why, at European level, we need to complete monetary union. And at national level, we need to avoid unsustainable spending. For example, Portuguese civil servants' salaries have been frozen since 2009. We have pledged not to touch anything until 2019, and we're sticking to it. So far, all we've done is very gradually reverse the wage and pension cuts that were temporarily applied to them under the Troika. The Portuguese cannot be said to be spendthrifts. It is very important to avoid sending the wrong message of a return to the imbalances of the recent past.

How did Portugal escape austerity?

We have invested politically in public confidence and succeeded in reactivating domestic demand, but without calling into question the rules of the euro and European membership. We haven't invented anything. We are simply among those who believe that it is wrong, from an economic point of view, and unfair, from a social point of view, to try to balance public accounts on the sole basis of a restrictive policy. As the Portuguese case shows, true fiscal consolidation can only be achieved with growth. If we promote economic growth. Family incomes and business production conditions, domestic demand increases. But this must be done without jeopardizing the other pillar of the economy, external growth.

You have been criticized for skipping over structural reforms...

We have completed the most important task, that of balancing the public accounts, which is fundamental for all of us who share the monetary union. On the economic front, we have left the 2012 labor (flexibilization) law untouched. But we have introduced our own agenda with reforms in vocational training and education, company capitalization, regional planning and the reduction of inequalities. It's true that we have eliminated some of the previous government's measures, such as wage and pension cuts or additional income tax rates, but these were temporary and exceptional provisions, and by doing away with them we have merely returned to constitutional order.

Many doubted the solidity of your project...

For us, Europe is the other name for democracy in Portugal, and the European project is the only one we want to be part of. Without a shadow of a doubt. We respect the rules of the EU and the euro, even if we also want to work to change them a little, as Emmanuel Macron and Angela Merkel also want, but we have always been clear: we have no alternative but Europe.

Did you have to tell your European partners?

Yes, we had to explain that we were not extremists, that we would never question Portugal's membership of the core EU. That if we had to choose between the euro and the fate of the minority Socialist Party government, we would have no hesitation. This was the message we sent to those who were worried about our pact with parties to the left of the Socialist Party.

Portugal has become the fashionable country...

That's what they say, and the good tourism figures show it. But that's not all. Our exports are also growing in industry, automotive, chemicals and transport. Our economy is changing, thanks to the talent of a highly qualified generation. We are attracting quality investment in cutting-edge sectors, because we are a country open to innovation. This is more important than the three-digit macroeconomic indicators. In recent months. We're no longer arguing with Brussels over the smallest details of our structural deficit forecasts. How reassuring!


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