The Portuguese Finance Ministry have agreed the Terms of the proposal to IMF/EU fund operators for the Bail Out.
The process is aimed at bringing the country back into economic control within 3 years, so there will be some tough times to come, but the general feeling amongst people that I have talked to is that it needs to happen. If this did not happen not then Portugal would have a hard financial struggle for many, many years to come. Everyone needs to pull together now and accept the cuts whilst planning ahead for when economic stability returns.
There will be higher VAT, higher real estate tax and sharp cuts in public spending, among other measures.
One measure that will affect many Expats is the changes to the IMI Property Tax Exemption in 2012. It is estimated that ½ million homeowners with be affected by this.
There will also be measures to streamline the legal system and clear out the court backlogs, as well as measures to strengthen the financial system.
The Ministry have produced their ‘Economic and Financial Adjustment Programme guidelines’ in English, and it is available on their website.
An extra €12bn has been ring-fenced to help the banking sector, but António de Sousa, president of the Portuguese Banking Association has said that he does not think they will call on the Bail-Out package. He expects the banks will able to meet the capital requirement from their own resources. The CEO’s of the top 5 Portuguese banks are backing the Economic Proposals.
Wendy Manning - Editor of Hey Portugal Magazine