The president of the European Stability Mechanism identified Portugal as a case of success and highlighted that the countries who complied with the adjustment programme are now "reform champions".
Klaus Regling, the president of the European Stability Mechanism (ESM) pointed out Portugal as a case of success and one of the member-States’ “reform champions”. Yet, he justified the good momentum of the Portuguese economy with the compliance with the strict measures of troika’s adjustment programme. The message is part of Regling’s speech delivered in the College of Europe in Bruges, this Tuesday.
The president of ESM explained the advantages of having created the institution he is in charge of and how countries were able to react to losing access to debt markets by means of its financing (and the previous European Financial Stability Facility’s).
"But in the long run, citizens will enjoy stronger economic results. Of the five ESM programme countries, four are success stories now. Ireland, Spain, Portugal and Cyprus have ended their programmes, and their economies are doing well.”
“In order to qualify for such advantageous loans, countries must commit to strict economic reform programmes to fix their problems“, stated Regling. “This means reducing public deficits, and restoring competitiveness by ending unsustainable wage policies and bringing down unit labor costs”, ESM’s president described. “Other reforms are aimed at liberalizing labor and product markets. And lastly, there are typically also problems in the banking sector that need fixing”, he continues, in a description that fits Portugal like a glove.
Regling acknowledged that it goes without saying that “initially, such reforms are often painful for the population. Lowering pensions and wages, and cutting government support programmes understandably are never popular”. But he connected this compliance to the success showed by the economies that went under the programme. “But in the long run, citizens will enjoy stronger economic results. Of the five ESM programme countries, four are success stories now. Ireland, Spain, Portugal and Cyprus have ended their programmes, and their economies are doing well”, Klaus Regling concluded.
Regling quoted the World Bank and the OECD to defend that “programme countries have also done extremely well in modernizing their economies” and that they are now “reform champions” and that “the structural changes they have implemented will form the basis for their future success”.