quarta-feira, junho 29, 2011

Austerity is not enough

Martin Wolf, of the Financial Times,  is right, austerity is not enough. And the BIS would be one-sided to focus only on the requirements for austerity in deficit countries, while forgeting the need for adjustment in the surplus countries. Because inflation and other economic conditions ARE divergent, we need at least TWO sets of measures, prescriptions for deficit countries AND prescriptions for surplus countries.

Yes, highly leveraged countries are running large structural budget AND external deficits, which have to be reduced through local efforts as soon as possible. In the case of smaller Eurozone countries, domestic adjustments are soon exhausted and  most of the offsetting adjustments must occur in their balance of payments and in their foreign trading partners and foreign creditors. 

Thus, it must be emphasized that it is impossible to eliminate structural domestic deficits without big shifts in the external balances. But the necessary external rebalancing is more or less blocked, in one case by China’s undervalued currency and in other cases by the inability to devalue or restrict imports within the Eurozone, given the Single Currency and the Single Market. 

Deficit countries can and must eliminate their structural domestic deficits, but this is only a necessary, not a suficient condition for the adjustments to occur. 

Clearly, fiscal and external rebalancing must always be two sides of a coin.  And it is impossible, ultimatley,  for this external adjustment to occur without big changes in the surplus economies, meaning that the surplus emerging and advanced economies have to spend more abroad and to reduce their external surpluses.

Finally, external adjustments are much more difficult, if not impossible, within in the Eurozone, which may justify the pessimistic bias of many European analysts. Without FX, trade and monetary policies, Eurozone countries must find new tools to overcome structural and apparently unresponsive private and external sector imbalances.

Though, in fact, the external adjustments are already well underway.  Both Greece and Portugal report reductions of 20-25% of their Current Account deficts thus far in 2011.

With an appropriate mix of policies, larger exports and lower imports of goods and services will help to compensate  and facilitate fiscal adjustment and lower private consumption. 

Of course, even with a much improved Current Account balance, any debtor country would need extra help to work out external Debt/GDP levels of 150-170%. 

Over to you, creditors. 

Mariana Abrantes de Sousa, economista
PPP Lusofonia, Lisboa 29-June-2011

terça-feira, junho 28, 2011

Tráfego, tráfego, tráfego ... 2

Não é só em Portugal que o investimento em obras públicas ultrapassou as necessidades de tráfego. Também em Espanha que fala de aeroportos e estradas vazias, elefantes brancos no gíria jornalística.   

"Castellón Airport, built at a cost of 150 million euros ($213 million), is not the only white elephant that now dots Spain’s infrastructure landscape. Spain’s first privately held airport — in Ciudad Real in central Spain — was forced to enter bankruptcy proceedings a year ago because of a similar lack of traffic."  

Ao contrário de Castellón, o Aeroporto de Beja, onde o Estado gastou só 33 milhões de euros,  já recebeu  cinco vôos, ainda que só transportam na média 17 passageiros
Castellón no NY Timees,
Beja no Correio da Manhã

segunda-feira, junho 27, 2011

Chefe de projecto de segurança alimentar, Angola

Position Summary:
CNFA is currently seeking applications from qualified candidates for its Chief of Party (COP) of an anticipated agriculture-led economic growth and food security project in Angola.
The COP is responsible for providing overall leadership management and general technical direction of the entire program, ensuring an integrated vision among different components and actors, and a focus on achieving results.
The ideal candidate is a seasoned professional with extensive experience in the agricultural sector in Africa (Angola highly preferred) to increase local incomes and food security, improve agricultural-sector policy, increase agricultural productivity and improve marketing and trade in regional and international markets.
He/she will act as the key liaison between USAID/Angola and all other counterparts, implementing partners and Government of Angola officials involved with the program.
Minimum Qualifications:
  • Master’s degree in international development, agriculture, economics or related field of study is highly desirable;
  • Excellent verbal and written communication skills, including advanced ICT skills especially as pertain to applications for agriculture and value chain development;
  • Familiarity with agricultural production and market-linkage constraints in Africa (Southern Africa is highly preferred);
  • Private sector agribusiness experience is highly desirable;
  • Verbal and written fluency in English required;
  • Portuguese language skills highly desirable
  • VER;

segunda-feira, junho 20, 2011

Euro zone moral hazard

Desafios da gestão de finanças públicas em tempo de crise


O Tribunal de Contas de Portugal em colaboração com o IDEFF e a Associação FONDAFIP promove, na próxima 2ª feira, dia 20 de Junho, na Culturgest, um Colóquio Internacional  com o tema: “A GESTÃO FINANCEIRA PÚBLICA E A CRISE”.

por Tribunal de Contas a Quarta-feira, 15 de Junho de 2011 às 14:17
Contamos com nomes tão importantes quanto:

GUILHERME d’OLIVEIRA MARTINS, Presidente do Tribunal de Contas de Portugal
MICHEL BOUVIER, Professor da Universidade de Paris I Phanthéon-Sorbonne, Presidente da FONDAFIP
DIDIER MIGAUD, Primeiro Presidente do Tribunal de Contas francês 
JOSÉ DA SILVA LOPES, Economista, antigo Ministro das Finanças
EDUARDO PAZ FERREIRA, Professor da Universidade de Lisboa, Presidente do IDEFF
VITOR BENTO, Presidente da SIBS, ex-Presidente do IGCP
JEAN-MARC FÉNET, Director-Geral Adjunto de Finanças, da Direção- -Geral de Finanças Públicas
JOÃO AMARAL TOMAZ, ex-Secretário de Estado dos Assuntos Fiscais
JEAN-LUC ALBERT, Professor da Universidade Jean Moulin Lyon 3
MANUEL HENRIQUE DE FREITAS PEREIRA, Conselheiro jubilado do Tribunal de Contas, Professor Catedrático convidado do ISEG
LUIS MORAIS, Professor da Universidade de Lisboa, Vice-Presidente do IDEFF
JOSÉ REIS, Professor e Diretor da Faculdade de Economia da Universidade de Coimbra
CARLOS MORAIS ANTUNES, Vice-Presidente do Tribunal de Contas
STÉPHANE THÉBAULT, Conferencista da Universidade de Bourgogne e Secretário- -Geral Adjunto da FONDAFIP
PHILIPPE AUBERGER, Membro do Conselho Geral do Banco de França e Antigo Relator Geral do Orçamento da Assembleia Nacional
JORGE MIRANDA, Professor da Faculdade de Direito da Universidade de Lisboa
BENOÎT JEAN-ANTOINE, Doutor em Direito, Investigador na Universidade de Paris I Panthéon-Sorbonne, Encarregado de Missão da FONDAFIP
MARIE-CHRISTINE ESCLASSAN, Professora da Universidade de Paris I Phanthéon-Sorbonne; Diretora da Revue Française de Finances Publique
MICHEL SAPIN, Deputado, Antigo Ministro da Economia e das Finanças
PAULO MOTA PINTO, Professor, Presidente da Comissão Parlamentar de Orçamento e Finanças
GUILLAUME GAUBERT, Chefe do Serviço, Diretor Adjunto do Orçamento
CHARLES COPPOLANI, Chefe do Serviço de Controlo geral, económico e financeiro
PAULO MACEDO, ex-Director-Geral dos Impostos
ALAIN LAMBERT, Conselheiro do Tribunal de Contas francês, Antigo Senador e Ministro do Orçamento
JEAN-FRANÇOIS BERNICOT, Conselheiro do Tribunal de Contas francês

Banks, Central Banks and Moral Hazard in the Eurozone Debt Crisis

As intermediaries between net exporters and net importers, banks are naturally in the front line of any Debt Crisis, be it households (subprime mortages), corporates (junk bonds) or sovereigns.

The difference this time, comparing the Eurozone  problems to earlier Latin American Debt crises for example, is that there has been no creditor stand-still. Thus the original commercial investors have used their political and market power to push their riskier exposures onto official creditors, to the ECB through bank refinancing and secondary market bond purchases and to Central Banks through the TARGET system, and thus to their respective taxpayers. These new ECB and Central Bank exposures to the net borrrowing countries are a direct reflection of the need to  finance the net exports of the net surplus countries and to repay existing debt.
This “nationalization” of the intra-Eurozone cross-border exposure has certainly increased the burden for European taxpayers but has yet to provide any real debt relief to the net borrowers in Greece and Portugal. There has been no real "burden sharing" between creditors and borrowers.
Since the Euro taxpayers are being asked to bear the costs of excessive lending, a better solution would be to use such taxpayer funds to provide interest rate subsidies to bridge the gap between the returns required by real cash investors and the interest rates that would be sustainable from the perspective of the borrowers, but only for truly long term direct exposure (20+ years).
Lowering the interest bill is an essential step in debt workout, together through the reprofiling of  the repayment schedules of  existing debt.  Debt  discounts  could also help to reduce the debt stock, at great reputation costs and loss of market access, but it would do little to reduce the new debt need.  Registered Credit Default Swap volumes are miniscule (only about 1% of external debt in the case of Greece, so CDS pricing is almost a curiosity. 

In addition, if is to survive, the Eurozone needs to develop new balance-of-payments adjustment instruments.   Argentina and Mexico tried, unsucessfully, to keep their exchange rates fixed, but none of these  countries are good examples for the current Eurozone problems, because they all devalued in the end. For someone with dollars, the shopping was great on Calle Florida after an exchange rate storm.
There seem to be no case studies yet of successful external adjustments within a Single Market or Single Currency context.  Thus, the IMF needs to reinvent the wheel on bailouts, or better yet, find a sextant, because we are sailing into uncharted policy territory. When dealing with intra-Eurozone balance-of-payments adjustments, the usual IMF prescriptions (devaluation, tariffs, interest rate increases, capital controls) must now stay in the drawer.
It must be evident to all that  small-country fiscal and incomes policies cannot be expected do ALL the heavy lifting needed for rebalancing the Eurozone.  
Another clear lesson thus far is that the Single Currency requires maintainging Current Account deficits/surpluses much lower, because it does away with most of the usual adjustment tools.

We also know that existing creditors, net exporters and their banks, will always use their considerable political and market power to  resist absorbing a "fair share" any of the sacrifices for their imprudent lending decisions.  The excessive sovereign debt levels are themselves a clear example of the failure of market discipline.  Fully protecting existing creditors from "sharing the sacrifice" in the name of "applying market-based solutions" would further contribute to  "moral hazards" of  new and untold proportions.

Mariana ABRANTES de Sousa 
PPP Lusofonia

See also
One-armed midgets can't guarantee Eurozone rebalancing 
Greece and Portugal reduce Current Account CAB deficits
There is no virgin debt, there's always bilateral responsability for trade deficits
Adjustment effort to focus on blance of payments
Soluções para a crise do sobre-endividamento 
DeGrauwe on Euro and Financial Crisis, 1998
Stockholm principles and best practices in public debt management 
Proposal for Debt Reduction without Default 

Gaming Maastricht:  Capping official budget deficits, which reflect internal imbalances, is proves worse than useless if current account external imbalances are allowed to balloon on the back of overly easy cross-border credit and hot money capital flows.  

sábado, junho 18, 2011

Portugal Current Account improves

Portugal improved its Current Account deficit to - €2,910 million in the first quarter of 2011,  28,6% less than in the year earlier period.  Most of the improvement occurred in merchandise and services, but transfers also increased, including transfers of €200 million from the EU. Exports reached 73% of imports in the period, compared to only 68% a year earlier and 63% in 2009.  Portual has a chronic trade defice, (especially with Spain and Germany, its main trading partners), including €3.1 million of net agricultural imports in 2010.  

Portugal major exports are: clothing and footwear, machinery, chemicals, cork and paper products, hides, tungsten and wine. Portugal imports mostly machinery and transport equipment, chemicals, petroleum, textiles and agricultural products. European Union is by far its largest trading partner accounting for about 72% of total trade.  

Portugal's recent xternal performance compares well with that of Greece,  which also reduced its Current Account deficit by -24,3% to - €7,300 million in the first quarter of this year.  

In the first 4 months of 2011, Portugal's Current Account Deficit continued well below (-24,9)% the levels of 2010.   The reducation of  €1.294 million was due primarly to improvevments of €366 million  in the trade balance and  €415 million increase in service exports, but also due to increasing incoming transfers. 

sexta-feira, junho 10, 2011

Primeiros nos sacrifícios

À PRESIDENCIA DO CONSELHO DE MINISTROS                                   
Paço de Belém, 29 de Janeiro de 1892                                                                                                       
Meu caro Dias Ferreira, 
Querendo eu, e toda a família real, ser os primeiros nos sacrifícios extraordinários que as circumstancias do thesouro impõem à nação, previno-o de que resolvemos ceder20 por cento da nossa dotação, emquanto durar a terrível e dolorosa crise, que actualmente atravessâmos. 
Creia, Dias Ferreira, que em  tudo e por tudo hei-de seguir a sorte da nação, à qual reputo essencialmente ligados os meus destinos e os da minha dynastia.                  
Seu affeiçoado,
EL-REI (D. Carlos de Portugal)                                                                                           
Com quase nove séculos de história, Portugal já superou numerosas crises, em boa parte graças às 
"virtudes de nobreza rara" como esta postura de El Rei D. Carlos face à crise financeira de 1892
Em 1892, o país sofreu um bancarrota parcial no seguimento da implantação da República no Brasil em 1889.  
O que deveria merecer bastante reflexão, é que, passados 120 anos, um regicídio, várias revoluções,  numerosos governos mais ou menos democráticos, e incontáveis Ministros das Finanças, Portugal se volte a encontrar na condição lamentável de pedir novos empréstimos para pagar juros sobre a dívida antiga e para financiar o défice comercial, incluindo os 60% dos alimentos que consumimos.  

sábado, junho 04, 2011

Certificação de qualidade, produtividade e competitividade, 14-Junho, Funchal

Seminário “Aumentar a Produtividade através de um Sistema de Gestão”, organizado pela APCER

14/06/2011 - 09:00
14/06/2011 - 12:30
Auditório Museu de Electricidade "Casa da Luz" - Funchal
Seminário “Aumentar a Produtividade através de um Sistema de Gestão”, organizado pela APCER, com a participação de:
- José Leitão, CEO APCER
- Isabel Rodrigues, Directora Regional, Direcção Regional do Comércio Indústria e Energia
- Hélder Estradas, Coordenador Sénior APCER
- Nigel Croft, Chairman ISO/TC176/SC2 – Quality Systems

Para consultar o programa, por favor clique aqui
Para efectuar a inscrição no referido evento utilize o e-mail:

APCER - Associação Portuguesa de Certificação
Tel.: 229 993 600 | 213 616 430 | 291 235 140 -

quinta-feira, junho 02, 2011

The Portuguese Economy: The elusive source of Portugal's depression: privatizations?

The Portuguese Economy: The elusive source of Portugal's depression: privatizations?

There is quite a lot of material regarding capture of the Regulator, caputure of the the State in procurement transactions and more recently "capture of the Concedent".
In the case of PPP contracts with low traffic usage,which have contributed to the reduction of overall investment productivity, it is evident that strategic behaviour by concessionaires may have lead to renegotiations that are quite onerous and unsustainable for the Concedent.
Availability PPPs and renegoations with changes in risk allocations are an integral part of the "low productivity / high debt" problem in Portugal, certainly not a part of the solution.
Mariana Abrantes de Sousa
See Game Theory and PPPs and PPP Agency and sustainability in PPP Lusfonia blog 

quarta-feira, junho 01, 2011

Portugal wakes up to cost of private-public financing

Portugal wakes up to cost of private-public financing
Sun May 29 2011 08:35:25 GMT+0400 (Arabian Standard Time) Oman Time
Portugal: Debt-ridden Portugal has made great strides since joining the European Union in 1986, building infrastructure with private money which critics say is becoming dangerously expensive.

Between 1990 and 2009, 2,600 kilometres (1,600 miles) of roads and motorways were built using private-public partnerships (PPP), a financing technique now under close scrutiny in Portugal.

The United Kingdom led the way, relying heavily on PPP financing in the 1990s.
Such partnerships associate the state with private investors which take on the execution and financing of building public infrastructure in exchange for a concession to operate it, generally lasting 30 years.

In so doing, the state avoids the immediate cost of an expensive investment and a private company gains access to a new market.

Portugal, a relatively backward European country 30 years ago, turned to this method to launch construction of the giant Vasco de Gama bridge in Lisbon in 1992.

It has since relied heavily, some now say too heavily, on these partnerships to build roads, railways and hospitals as part of its rush to modernise and raise competitiveness.
Figures in the 2011 budget law showed that PPPs have cost the taxpayer 842 million euros (1.18 billion dollars), with the amount expected to reach 1.2 billion euros by 2018.

"The problem with Portugal is that there are too many," said economist Jose Manuel Viegas, professor at Lisbon's High Institute of Technology. "Portugal is by far the European country that has turned to the partnerships the most."

A recent report by the finance ministry said that Portugal had committed itself to 86 public-private partnerships in 2009 with 57 in operation, 17 under construction and 12 out to tender.

"These partnerships have allowed successive governments to realise major investments without impacting the state budget," Carlos Moreno, a former public auditor, said in a book 'How the State Spends our Money.'

"But this method is reaching a crisis point," he warned.
Last month, the European Union and International Monetary Fund mission which was negotiating terms for a debt rescue, asked the Socialist Government to include three PPPs in its 2010 accounts, increasing the public deficit from 8.6 percent of gross domestic product to 9.1 percent, three times the eurozone ceiling.

The mission has also required that Portugal freeze any new partnerships until an audit of the 20 biggest ones is completed.

This has been applauded by the centre-right Social Democrats (PSD), Portugal's main opposition party, which is campaigning heavily on the theme in the run-up to snap legislative elections on June 5. 


See also the "iceberg" of hidden PPP-realted Goverment liabilities