The Minister of Foreign Affairs on Wednesday considered that Portugal’s image has been reinforced by the Covid-19 crisis, claiming that political unity had been achieved by keeping democracy alive and preserving the response capacities, for example of the NHS.
“The image of the country is reinforced in this crisis in different dimensions”, due to, on the one hand, “the political unity and institutional consultation [achieved], keeping all the constituent elements of a living democracy with a multi-party parliamentary basis. This idea of political unity is one of the most important points for the country’s image,” Augusto Santos Silva said in the parliamentary committee on Economy, Innovation, Public Works and Housing.
In addition, the capacity to respond has been preserved, added the minister, underlining that it is the “most important element”.
“The resilience of the SNS [National Health Service] is one of the most important elements in the circles that count in Europe: the political, economic, business, union and naturally also the public opinion,” Santos Silva said.
Questioned by MPs, the minister admitted the export sector will be one of the most penalized with the current crisis but considered that recovery to the 2019 level should happen in “two to three years.
“According to EU forecasts, it is possible that the fall in Portuguese exports will reach 14%, but this fall we all foresee will be cyclical,” Santos Silva said, adding that “the same forecasts point to a recovery of 13% in Portuguese exports the following year.
Despite not expecting the 2021 level of the economy to be the same as last year, the minister said that the government’s forecast of recovery in two to three years, “is more than comfortable”.
The minister also considered that the response to the crisis should not be made through austerity, but “through investment by all” and “betting on new opportunities.
Although Santos Silva admitted that the accumulation of debt by the State is a mistake, he implied that going to the debt market is inevitable.
The State “has suffered the consequence of the slowdown in economic activity, which is the decrease in tax revenue and, at the same time, has increased its expenditure very significantly, both with credit lines and with resources that it makes available to families, individuals and companies”.
The State has to finance itself “much more than what was foreseen in the State Budget for 2020”, and “this need for State funding will grow in the coming months because in the recovery phase of the economy more funding will also be needed”.
On the other hand, “one of the lessons of this crisis in Europe is the importance of not losing sight of the state’s social expenditure because it is this that guarantees the capacity to respond in terms of health and social protection,” Santos Silva said.
To overcome the situation, by achieving lower costs and longer payment terms, Augusto Santos Silva considered that the best solution is for EU member states to ask the market for financing together.
“If we go to the market together, if the European Commission goes on our behalf, we will all get a double benefit: more generous moratoria, more manageable repayment terms and lower if not non-existent interest rates”, he said.
On the other hand, he added, this cooperation allows “speculative attacks on the market, the vultures, to have less grass to feed themselves”.
Listening today in committee to Portugal’s strategy to overcome the economic crisis caused by the Covid-19 pandemic, the foreign minister said the government wants to transform the country into a “powerful industrialisation ‘cluster’ in Europe”.
“The first axis [of Portuguese strategy] is that Portugal wants to be at the forefront of the reindustrialisation of Europe and wants to put at the service of Europe its enormous industrial capacities”.
According to Santos Silva, the economic crisis caused by the lockdown has forced him to “learn some lessons that could be an opportunity for Portugal and Europe”.
One of those lessons is that the European economy needs to be reindustrialised, which, according to Augusto Santos Silva, could be an opportunity for Portugal.