Following the introduction of fiscal deficit reduction programs in Greece, Portugal became the second country in euro zone area to launch fiscal program to cut the deficit. Euro zone countries begin to take action and gradually stabilize confidence in the euro against market speculation. The European sovereign debt crisis of confidence has entered a crucial period.
The Portuguese Government announced that it would, through the reduction in civil service salaries and overhead, reduce public sector investment, increase in tax income groups and improve the stock market gains tax and other measures to greatly reduce the fiscal deficit.
In addition, the government will sell 60 billion euros of assets to ease the debt burden. Portuguese Finance Minister Fernando Teixeira dos Santos described this program as “a debate about reducing the burden on the national economy, reduce public spending gambling.” He said the program will continue 4 years or longer. The whole process and the estimated public debt will reach about 2012 gross domestic product, 90.1% of the peak, after which the data will be a gradual decline. The Government seeks in 2013 to have share of GDP fiscal deficit increased from the current 8.3% reduced to 2.8%, thus in line with the relevant requirements of the European Union.
Portuguese Government initiatives have been trying to further restore market confidence of investors in the euro EU member states, as well as an important step to restore economy. After addition to Greece, Spain, Italy and Portugal, several countries government deficit and debt problems, the market has been gradually transferred to the concerned British government deficits and bank-related debt risk. It was pointed out that the U.S. government deficit and debt will also be affected, a time of market panic, the euro exchange rate, bond yields, as well as all countries have seen substantial volatility in CDS prices.
In this regard, we have to see the market and the conduct of the government from different perspectives. The market all the time is full of games of speculation. Any errors can be attacked and punished. Even the EU and its member governments of this game have different strategies to deal with deficits. They all have similar polices to restore the confidence and stability of their countries.
Although the euro area, since its inception, is full of many flaws, letting the euro perish in euro area is undoubtedly the worst move in history, for every single member of the European Union.