Social Democratic Party (PSD) forces the left to vote the 630 millions banking pardon

The Social Democratic Party (PSD) will force the left to take a stance on the conditions of the State’s loans to the Resolution Fund. The revision of the first conditions allowed for a pardon to banking of around 630 million euros, according to UTAO’s report. In order to avoid these costs, the social-democrats will present a resolution project in which they recommend the Executive to once again change the conditions of the loans’ repayment.

ECO was able to have access to the resolution project, in which the social-democrats recommend the Government should assure an update of the capital and interests payment in order for it “to be at least equal to what the State has lent“; the goal is to avoid costs for taxpayers.

PSD deputies argue they moved forward with the resolution project because the renegotiation of the repayment conditions “decreased the value of capital and interests payment, in addition to placing interests significantly below the costs for the State to mobilize those borrowed financial means”. They argue that it is not about renegotiating those loans, but rather the terms and conditions which are harmful for taxpayers”.

The Social Democratic Party believes there were other possible solutions, such as “alternative ways of non-state financing from the Resolution Fund”, or the renegotiation of the terms of the loans in order to reflect the costs it needs to bear to finance itself on the amount of money it did lend”. They acknowledge that this could stem into a revision of the terms in which “banks contribute or finance the Resolution Fund”, but they believe that the need to have a stable financial system “cannot be translated into loan conditions which now impose a high cost for taxpayers”.

When confronted with the issue, Mário Centeno, Finance minister, explained to deputies that without that change, banks could not have made the repayment. Ultimately, the updated amount of those loans would be almost null, stated the former Finance minister Maria Luís Albuquerque, without stating how much would the cost be. Therefore, deputies asked UTAO (Portuguese Technical Unit for Budget Support): the commission approved the requirement for experts to do the math.