Nova BS and Catolica SB

Nova and Catolica register high increases in the Financial Times European ranking. 

In only one year, Catolica-Lisbon School of Business & Economics and Nova School of Business & Economics have jumped to the elite of the European graduate programs, showing in the top 40 of the 2011 edition of the FT school of business rankings. 

More than the rankings themselves, it is to be noted how fast the schools have jumped up in the scale. Going up by 29 slots, Catolica went from 62 to 33 in the ranking, while Nova went from 73 to 39, the school with the largest jump in the year

€10.8 Bn Cuts In Expenses weights on Families and Corporates

Until 2015, the Government is planning to do €10.8 Bn cut in public expenditure. This reduction has no precedents.

Most of the adjustment will be done in 2012 and 2013, with total measures reaching €8.2 Bn. However, the largest share of the custs is not only in the "fat" of the public machine. Families and corporates will be paying the large part of the deficit reduction.
Out of the total cuts, €4.9 Bn of 2012 are related to salaries, pensions and social benefits. In 2013, out of the €3.3 Bn in cuts, €2.0 Bn will be paid by companies and corporates and a lesser portion of €3.3 Bn by the government.
Sourced from: Diário Económico

Before: 4 Institutes, After: 1 Institute

The Minister Counsil approved today the fusion of 2 institutes and the extintion of another 2. The Government decided to merge the Insitute of Youth and the Institute of Sport and eliminated the Institute of Promotion of New Technologies and Movijovem.

Results: €14 MM savings, from 112 directors to 43

4 done, more to go!

Source Diario Economico, 4 August 2011

Original news:

http://economico.sapo.pt/noticias/governo-poupa-14-milhoes-com-extincao-de-quatro-organismos_124051.html

Europe lashes out over downgrades

Senior European officials lashed out at Moody’s on Wednesday, questioning the timing of the debt rating agency’s downgrade of Portuguese bonds this week and threatening new regulatory action against all three major rating agencies.

The high-profile criticism follows long-simmering European complaints about Moody’s and its two competitors, Standard & Poor’s and Fitch, centring on whether they have improperly attempted to influence policy-making in the ongoing debt crisis.

 

The Portuguese downgrade – four notches to “junk” status – comes amidst a heated debate over how hard to push private owners of Greek debt to delay repayments from Athens. José Manuel Barroso, president of the European Commission, questioned the timing, and said Moody’s was guilty of “mistakes and exaggerations”.

 

“I deeply regret the decision … and I regret it both in terms of its timing and its magnitude,” Mr Barroso said. “With all due respect to that specific rating agency, our institutions know Portugal a little bit better.”

On Tuesday, Angela Merkel, German chancellor, and François Baroin, French finance minister, sought to downplay Moody’s decision, saying it would not affect their decision-making.

But Mr Barroso’s comments, along with similar remarks Wednesday by Wolfgang Schäuble, the German finance minister, appeared a concerted change in tenor, with both men arguing that efforts to reduce the agencies’ power would gain momentum.

“We can’t understand the basis of this announcement,” Mr Schäuble said. “We have to break the oligopoly of the ratings agencies.”

(...) Rating agencies defended their decisions, with a Moody’s spokesman saying the agency’s continues “providing independent, objective assessments of credit risk on debt securities”. S&P said: “We are focused on our role of providing investors with an independent and globally consistent view of creditworthiness, based on our published criteria.”

Some analysts accused European officials of attempting to distract voters and financial markets from their difficulties in formulating an effective response to the crisis.
“EU leaders will be well advised to stop blaming ratings agencies for their own shambolic handling of the euro area crisis,” said Sony Kapoor, head of Re-Define, an economic consultancy.

The European complaints echo similar criticisms made by Washington in April, when S&P cut its outlook for US bonds in the midst of budget negotiations between the White House and congressional Republicans. At the time, senior US Treasury officials questioned the timing and accused S&P of being misinformed about the budget talks.

European officials have argued that downgrades have frequently coincided with high-profile meetings of European leaders – evidence, they believe, of agency politicisation.

(...) “The credit rating agencies are playing politics not economics,” said a senior EU official. “The timings of the downgrades are not a coincidence.”

http://www.ft.com/cms/s/0/23a44f2a-a7ee-11e0-afc2-00144feabdc0.html#ixzz1RQJg7sSJ

Portugal hits back at Moody’s downgrade

@ FT By Peter Wise in Lisbon

Portugal has hit back at Moody’s for downgrading the country’s sovereign debt to junk status, criticising the US rating agency for failing to take into account new austerity measures and a “broad political consensus” in favour of tough fiscal discipline.

The four-notch downgrade to Ba2 has dealt a blow to Portugal’s efforts to distance itself from Greece and is expected to increase the yield the country has to pay at an auction of up to €1bn ($1.4bn) of three-month treasury bills on Wednesday.

 

Portugal’s PSI equity index quickly fell 2.6 per cent and the country’s credit default swaps have hit a record of 850 basis points, up 80bp for the day. Spreads between Spanish and Italian sovereigns and Bunds are also widening, indicating contagion fears.

 

Vítor Gaspar, finance minister, said the ratings cut to below investment grade failed to reflect the unequivocal support of the main government and opposition parties for the country’s €78bn financial rescue programme. (...)

Pedro Santos Guerreiro, editor of the Jornal de Negócios business daily, said the ratings cut threatened to become a self-fulfilling prophecy, undermining the investor confidence Portugal needed to resolve its debt crisis.

The Left Bloc, a small leftwing party opposed to the bail-out, said the downgrade proved that tough austerity measures taken over the past year were not the solution to the country’s difficulties.

Moody’s said the downgrade reflected fears that Portugal would need to follow Greece in seeking a second bail-out.

Moves to involve private investors in a new rescue plan for Greece made it likely that the EU would require the same preconditions for Portugal, the agency said in a statement on Tuesday night.
This would discourage new private sector lending, decreasing the likelihood that Portugal could resume financing its debt in international markets in the second half of 2013, as envisaged in the bail-out agreement, Moody’s said.

The agency also cited “heightened concerns” that Portugal would not be able to meet the deficit-reduction targets it has agreed to in the rescue package.
This was because of the “formidable challenges” facing the new centre-right coalition government to cut spending, increase tax revenue, lift economic growth and support the banking system.

However, Mr Gaspar said the downgrade ignored the impact of an extraordinary tax on income announced last week, which was “proof of the government’s determination” to meet this year’s deficit targets by going beyond the bail-out agreement.

The one-off tax, which will require Portuguese workers to forfeit half of the extra one month’s pay they receive as a December bonus, is expected to raise more than €840m.

Mr Gaspar said the government was committed to meeting deficit-reduction targets ahead of schedule and taking additional austerity measures beyond those set out in the rescue agreement.

It would also accelerate the privatisation programme agreed with the so-called “troika” – the European Commission, IMF and European Central Bank. This would have a positive impact on the public debt and market confidence, he added.

 http://www.ft.com/cms/s/0/86e26194-a7a3-11e0-a312-00144feabdc0.html#ixzz1RKX7ERxY

Politicians battle over Portuguese bail-out

Campaigning for Portugal’s June 5 general election has exposed sharp differences between the two main political parties over how the next government should implement the country’s €78bn bail-out deal.

Both the Socialists of José Sócrates, caretaker prime minister, and the centre-right Social Democrats (PSD), the main opposition party, have signed up to a package due to be approved today by the European Union and the International Monetary Fund.

But divergences over how to achieve the targets set out in the three-year programme of tough austerity measures and economic reforms have raised concerns over how successfully and at what pace they will be carried out.

In a hard-fought campaign, with the two main parties virtually level in opinion polls, Mr Sócrates accused the PSD of using the EU-IMF deal as a pretext for proposing “the most radical rightwing programme ever put forward” in Portugal.

PSD plans to privatise state broadcasters, transport companies, financial institutions and water utilities and to “open state education and healthcare to private enterprise” went far beyond the bail-out agreement, said Mr Sócrates.

A PSD victory would put “social justice and equality of opportunity at risk”, he said at the weekend.

But Pedro Passos Coelho, PSD leader, said his election manifesto intentionally went “further and deeper” than the EU-IMF package in an effort to lift Portugal out of “the cycle of poverty” created by six years of socialist government.

Mr Sócrates’s election programme was based on the same policies that had brought the country to “the brink of bankruptcy”, he told PSD supporters in the Azores islands at the weekend.

Policy disagreements over painful deficit-reduction measures have been intensified by the latest EU economic forecasts. Portugal is the only European country projected to be in recession in 2012, with unemployment reaching a record 13 per cent and public debt exceeding 100 per cent of gross domestic product for the first time.

According to José Pacheco Pereira, a historian and senior figure in the PSD, the Socialists plan to “sidestep, postpone, evade and, in some circumstances, simply not apply” the bail-out deal.

Voters who wanted to “resist [the EU-IMF programme] and who believe that is possible” would vote Socialist, he wrote in a newspaper column.

Those who understood that it would have a “remedial impact on the role of state” and was, “in effect, Portugal’s last chance” would support the PSD.

Concerns over how effectively the next government will execute the bail-out agreement have been heightened by opinion polls suggesting that neither the PSD nor the Socialists would gain a clear majority in the election. Most polls give the Socialists a lead of 2-3 percentage points over the PSD, but the difference is within the margin of statistical error.

Mr Passos Coelho has ruled out serving in a government coalition with the Socialists. But the polls indicate his that preferred coalition with the small conservative Popular party would not command an overall majority in parliament.

Political analysts fear that attempts to form a majority coalition government after a close election result would involve protracted negotiations, possibly resulting in an impasse or another weak minority administration.

Mr Sócrates’s own minority government was defeated in parliament in March, triggering the political crisis that he says forced Portugal to ask for a bail-out.

Copyright

The Financial Times Limited 2011

@FT: Portuguese parties battle over labour costs

By Peter Wise in Lisbon

A fiscal “devaluation” included in Portugal’s €78bn bail-out package to cut labour costs has become one of the most disputed issues in the country’s election campaign.

T

he centre-right Social Democrats (PSD), the main opposition party, have embraced the measure to make companies more competitive by cutting social security contributions as part of their manifesto for the June 5 vote.

But the Socialists of José Sócrates, the caretaker prime minister, question how the reduction, and subsequent shortfall in public revenues, will be financed, estimating that it would need a three percentage point increase in the main value added tax rate to 26 per cent.

Although both parties have voiced support for the rescue package agreed last week with the European Union and the International Monetary Fund, the election row has exposed differences over how the three-year programme should be implemented.

The bail-out package envisages cutting corporate social security contributions by the equivalent of 3 to 4 per cent of gross domestic product over the next four years.

“This is a potential game changer,” said Poul [correct] Thomsen, head of the IMF negotiating team. “It replicates a currency devaluation by significantly reducing the labour costs of enterprises in one go.”

The level of reduction was “very, very dramatic”, he told the Financial Times last week.

According to the rescue agreement, the measure is to be financed in a “fiscally neutral” way through public spending cuts and tax increases to be “calibrated and developed in detail” over the next three months.

Eduardo Catroga, expected to become finance minister if the PSD wins the election, said on Monday the party proposed to lower employers’ contributions four percentage points in four years to below 19 per cent of workers’ wages.

Some goods and services would be moved to higher VAT rates to fund the measure, he said, but there would be no change in the basic rate.

The cut was targeted mainly at export companies in an effort to lift growth and create jobs, he added. Less competitive telecommunications, energy and other utility companies would be required to pass on the benefit in lower prices.

Francis Assis, a Socialist leader, warned that the PSD proposal would have a negative social and economic impact if VAT rates were increased. He did not say how his party would finance the make up the shortfall.

Pedro Passos Coelho, the PSD leader, said his party’s election programme went much further than the EU-IMF agreement in terms of public spending cuts and economic reforms.

Proposals not part of the rescue package include steps to privatise one of Portugal’s two state television channels, reduce the number of MPs from 230 to 181 and impose “peremptory limits” on the length of criminal investigations.

Copyright

The Financial Times Limited 2011.