From: Francisco Louçã <[log in to unmask]>
Date: 16 March 2014 19:37
Subject: call for Portugal
To:


Dear colleagues

You are certainly aware of the discussions among economists in the countries under the troika programs. In the case of Portugal, a new fact changed the context of the national debate on austerity: 74 economists, including an impressive number of ex-finance ministers of previous left and right wing governments, made a call for restructuring of the debt and challenging austerity. I signed it and so did Mariana Mortagua - an excellent Member of Parliament whom I expect not to give up the PhD with you - and all those supporting a new strategy for employment and growth.

This is very important, since in a couple of weeks a decision will be made on what will happen after the end of the troika program (may 17th). This call for the restructuring of the debt and a new policy generated a new perspective: the IMF, the European Commission and of course the Government made public statements against our call.

An european perspective would be most welcome on this. I attach a small text in this sense. It would be most helpful if some renamed economists could stand for this.

Could you sign it? Would you help diffusing the text for signatures among colleagues and friends?

All the best

Francisco

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Francisco Louçã
Full Professor of Economics
Lisbon University
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Restructure the unsustainable debt and promote growth, not austerity


The IMF-European Union rescue program in Portugal (2011-2014) is due to end May 17th. The decision will be taken in the next weeks on accepting either a “cautionary program” led by the ECB and following the same line, or the rule of the markets. In both cases, the rule of austerity is supposed to be pursued in a country in which the level of unemployment doubled to more than 20% as a result of the prevailing strategy.

Furthermore, the strong reductions of the public budget did not prevent the ratio of debt to GDP to climb to 129%: in the two years before 2008, debt was increased by 0,7%; in the two following years, it grew 15%. As a consequence, every year Portugal is paying as interests the same amount as it spends with its national health system. The results are clear: austerity and fiscal measures reducing aggregate demand aggravate the recession and the level of debt, and impose social suffering as pensions and wages are reduced, taxes are increased and social welfare is degraded.

As economists of different opinions, we have expressed our concerns about the effect of the austerity strategy in Europe. We strongly advised against the ideas of “curative recession” and “expansionary austerity” and the programs imposed to several countries. We criticized the options of the ECB during the prolongation of the recession and the following mediocre recovery. The results vindicate our criticism. It is time to change the course.

Therefore, we call for a consistent European policy against the recession. We support the efforts of those proposing in Portugal the restructuring of the global public debt, in order to obtain lower rates of interest and longer periods so that the burden of payment is made consistent with a strategy for growth and the creation of employment.

The undersigned,


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