Tuesday 18 May 2010

too late for a commitment?

   Yesterday, a surprising proposal was presented by Luis Amado, a member of the cabinet: set a constitutional limit to the public debt and to the public deficit.
   Two issues deserve comment:
   a) the idea itself
   b) the moment it is presented
   A final curiosity - being proposed by a current Minister, who does not hold an economic ministry!
   About the idea, given the reputation of Southern countries spending too much, this could be a credible commitment if the mechanisms in action in case of non-compliance are clear, transparent and fair. What can they be? not sure, suggestions ?
   About the moment, given the "troubled waters" with financing of public debt, I wonder how much this measure can make a difference. It only works for the long term, but that's probably better than just taking measures for the next two weeks.
   Since the problem of the Portuguese economy has been pointed out to be one of sluggish growth, with Government presence in the economy being one of hindering factors, this measure may restore some confidence on better long term prospects for the economy.
   On the other hand, it may be seen as only "lip service" to current difficulties, and be disregarded as irrelevant.
   I lean to the side of considering it adequate, if political parties find a way to make it enforceable, as just writing it in the Constitution does provide much, even if in the short run it does not change much.
   What do you say?

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