It is one of the most incredible features of Portuguese economy. We all learned in college that the State is usually a reputable entity, that assumes all its debts and pays them fully at the contractual time. Well… not the Portuguese one.
After years of irresponsible cash flow management, the State debt to the private sector surmounts at… 2450 Million euros! Lets not try to drive this to small politics – this isn’t a problem solely of this government, or the one before, it is an issue that has been initiated decades ago, but in which each individual government since then is responsible for not being able to tacke. Delays on payments from public sector hospitals to suppliers, not paying contracted work on schools assistance, or construction works or… whatever. It is something that runs across all the Portuguese economy. A huge problem waiting to be tackled, that consumes valuable resources from the private companies, shifting money from investment to cover the hole of money that the public sector owes them.
Now, as recession threatens (? – I think its already here) to plague the Western world, and cheaper loans are gone, the Portuguese government decided to announce another program to end public sector debts – a even greater need nowadays, that would enable the affected companies to stop loans to cover this hole, while injecting money in the whole economy. But how is this going to work? A major question mark arises, even because some of those debts were not contracted directly from government-dependent offices, but by Towns or semi-public institutions like hospitals.
So, the word is… let me wait and see.
After years of irresponsible cash flow management, the State debt to the private sector surmounts at… 2450 Million euros! Lets not try to drive this to small politics – this isn’t a problem solely of this government, or the one before, it is an issue that has been initiated decades ago, but in which each individual government since then is responsible for not being able to tacke. Delays on payments from public sector hospitals to suppliers, not paying contracted work on schools assistance, or construction works or… whatever. It is something that runs across all the Portuguese economy. A huge problem waiting to be tackled, that consumes valuable resources from the private companies, shifting money from investment to cover the hole of money that the public sector owes them.
Now, as recession threatens (? – I think its already here) to plague the Western world, and cheaper loans are gone, the Portuguese government decided to announce another program to end public sector debts – a even greater need nowadays, that would enable the affected companies to stop loans to cover this hole, while injecting money in the whole economy. But how is this going to work? A major question mark arises, even because some of those debts were not contracted directly from government-dependent offices, but by Towns or semi-public institutions like hospitals.
So, the word is… let me wait and see.
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