a present a cao gaspar abril 2013

7/28/2019 A Present a Cao Gaspar Abril 2013

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Vtor Gaspar

Adjusting in the euro area:the case of Portugal

Trinity College DublinApril 11 th , 2013


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20081999 2009 2010 2011 2015

Crisis and its aftermath: a chronology

2

Crisis as simpledemand-driven

contraction

Expansionary FiscalPolicy

Alignment of Sovereign andBanking Risks

FurtherPostponement

Leading to Near-bankruptcy

An error of judgment

Strong compliancewith the Program

7/12 reviews Over 80% of

financing received (1)

Progress in alldimensions of theProgram

Fiscal Consolidation Deleveraging and

Financial Stability Structural

Transformation

ECONOMIC ADJUSTMENT PROGRAM

Macroeconomicstability and

sustainablegrowth

Balancedbudget andreduction of public debt

FinancialStability

Open andCompetitiveEconomy

AFTER CRISIS

Accumulation of macroeconomic

imbalancesand structural

bottlenecks

UnsustainablePublic Finances

Over-indebtedness

Anemic EconomicGrowth

Low Productivity

Building upimbalances

2012 2013 2014

ConstitutionalCourt ruling on2013 Budget Law

Return of thesovereign to thefinancial markets

Focus oninvestment andcredit recovery to

relaunchemployment andeconomic growth

Maintain politicaland social support

Complete publicexpenditure review

(1) Up to the 7 th disbursement, following the 6 th Review

Achievements Challenges

POSTPONING THE ADJUSTMENT


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Outline

1. Slump and Bust.

2. The Economic Adjustment Program.

3. Macroeconomic developments.

4. Fiscal Consolidation.5. Deleveraging and Financial Stability.

6. Structural Transformation.

7. Conclusion.

3


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1. Slump and Bust


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2008-2010

An Error of Judgment inthe conduct of policy:

1. Alignment of systemic risk in thePortuguese economy

2. Postponement of adjustment throughexpansionary fiscalpolicy

3. Heightenedvulnerability in thecontext of the EAsovereign debt crisis

1995-2008

Build-up of imbalancesin the Portugueseeconomy:

The Portugueseeconomy is in serioustrouble: Productivitygrowth is anemic.Growth is very low. The

budget deficit is large.The current accountdeficit is very large . Blanchard, 2007

Portugals imbalances exposed in the context of the economic and financial crisis

Blanchard, O. (2007). Adjustment with the Euro: the Difficult Case of Portugal, Portuguese Economic Journal . 5

Sudden-Stopmaterialized

in early2011

I II


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Budget deficits over 3% of GDP since themid-1990s

Upward trend of General Governmentgross debt, surpassing 60% of GDP in 2004

Increase of Private debt since the mid-1990s , reaching 240% of GDP in 2008

Current account deficits of ~10% for adecade

Deteriorating competitiveness

Increase in unit labor costsIncrease in the real effective exchangerate

1995-2008: Build-up of imbalances in thePortuguese economy

6

For too long,Portugal preserved

fiscal rules and proceduresdeveloped duringdecades of monetary instability and limited capitalmobility.

Such fiscal rulesand procedureswere completely inadequate in thecontext of theeuro area.

Portugal did not adjust to the specific requirements of the Monetary Union

Anemiceconomicgrowth and lowproductivity

Unsustainablepublic finances

Over-indebtedness

I


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Anemic economic growth

Source: AMECO, April 2013 7

Gross Domestic Product1998 = 100

I

100

110

120

130

140

150

160

170

180

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013(P)

2014(P)

IrelandSpainGermanyGreecePortugalItaly


8/48

Excessive private debt accumulation

Source: Eurostat, April 2013 8

Private debt, non consolidated, annual dataPercentage of GDP

I

Portuguesehouseholds and nonfinancialcorporations did nothave direct access toforeign financing.

The banking systemacted as anintermediary.

This is the origin of the heightened

systemic risk inPortugal , associatedto an increase in theloan-to depositratio.

0

50

100

150

200

250

300

350

1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

IrelandPortugalSpainItalyGermanyGreece


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2008-2010: An Error of Judgment in the conductof policy

9

II

Considering theevents of 2008-2010 as

a simpledemand-drivenbusiness-cycle

fluctuation wasan error of

judgment that proved to be

expensive inthe context of the euro areasovereign debtcrisis.

Expansionary fiscal policy

Heightenedvulnerability in thecontext of the EAsovereign debt crisis

Alignment of systemic risk in thePortuguese economy

Postponement of adjustment throughexpansionary fiscalpolicy

Sovereign provides guarantees to thebanking sector

Increase in bank credit to the publicsector

Effectiveness in the short run, butsignificant long run costs in terms of lost activity and unemployment

Denial about to the need to adjust

Presentation of 2010 State Budget asa defining moment

Increase of sovereign risk throughout2010 , despite ECB support


10/48

Increase in bank credit to General Government

Source: Bank of Portugal 10

Domestic Credit

Year-on-year change, %

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

14%

2 0 0 7

2 0 0 8

2 0 0 9

2 0 1 0

2 0 1 1

Domestic Credit (Households and Non-Financial Corporations) Total Domestic Credit (non-monetary sector)

Domestic credit toGeneral Government

II


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Public sector expansion offset private adjustment

Source: National Statistics Institute, April 2013 11

Net lending /net borrowing by institutional sectorAs percentage of GDP

II

-12

-10

-8

-6

-4

-2

0

2

4

6

8

2007 2008 2009 2010 2011 (P)

General Government Non Financial Private Sector Financial Corporat ions

-12

-10

-8

-6

-4

-2

0

2

4

6

8

2007 2008 2009 2010 2011 (P)

Total Economy


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Successive upward revisions of 2009-2010 Budgetdeficits

12

II

2009 2010 2009 2010GOP 2005-2009 Jul-05 -1,6 64,5PEC 2005-2009 Dec-05 -1,5 66,2PEC 2006-2010 Dec-06 -1,5 -0,4 65,2 62,2

ROPO 2007 Apr-07 -1,5 -0,4 62,6 59,7EC autumn Oct-07 -2,4 64,5

PEC 2007-2011 Dec-07 -1,5 -0,4 62,5 59,7EC spring Apr-08 -2,6 64,3

ROPO 2008 May-08 -1,5 -0,7 62,5 60,5OE 2009 Oct-08 -2,2 64,4EC autumn Oct-08 -2,8 -3,3 65,2 66,6

PEC 2008-2011 Jan-09 -3,9 -2,9 69,7 70,5EC spring Apr-09 -6,5 -6,7 75,4 81,5

ROPO 2009 May-09 -5,9 74,6

EC autumn Oct-09 -8,0 -8,0 77,4 84,6

OE 2010 Jan-10 -9,3 -8,3 76,6 85,4"PEC I" PEC 2010-2013 Mar-10 -9,3 -8,3 77,2 86,0

ROPO 2010 Jul-10 -9,3 -7,3 76,3 83,5"PEC III" OE 2011 Oct-10 -9,3 -7,3 76,1 82,1"PEC IV" PEC 2011-2014 Mar-11 -7,3 82,4

IMF Staff Report Jun-11 -10,1 -9,1 83,0 93,0INE/BdP Final Data Mar-13 -10,2 -9,8 83,7 94,0

General GovernmentBudget Balance

(% GDP)

General GovernmentGross Debt

(% GDP)

General election (27-Sep-09)

Note: The document known as "PEC II" corresponds to Law no. 12-A/2012 of 30 June.


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The Error of Judgment led to a Sudden Stop ininternational private financing

Source: Bloomberg 14

10-year Government bond yieldsSpread against Germany in basis points

0

200

400

600

800

1000

1200 Austria ItalyBelgium SpainFrance IrelandNetherlands Portugal

Finland Greece

The e ffects of expansionaryfiscal policy on

public financesustainability wererevealed in thecontext of thesovereign debtcrisis in the euroarea , exposingPortugalsstructuralimbalances.

In April 2011,

Portugalsrequest forfinancialassistancebecameinevitable toavoidbankruptcy.


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2. The Economic AdjustmentProgram


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A balanced Program to cope with the majorchallenges of the Portuguese economy

16

The EconomicAdjustment ProgramprotectsGovernmentfinancing frommarket pressures,allowing an orderlyadjustment of imbalances and timeto build up

confidence andcredibility.

Fiscal consolidation

Putting fiscal policy on asustainable path

Structural transformation

Implementing structural reforms tocontribute to potential growth

Deleveraging and financial stability

Reduction of debt and financingneeds of the economy The Economic

Adjustment Program


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3. Macroeconomic developments


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Strong increase in exports

Source: AMECO, March 2013 18

Exports-to-GDP ratioPercentage

41403936

3128

32323128282828282927

20032002200120001999

+7%

+1%

20142013201220112010200920082007200620052004

Annual average growth rate

Projections


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Reversal in internal demand contraction

Source: National Statistics Institute, March 2013 19

Contributions to GDP growth (year-on-year)Percentage points

-3,1 -2,3 -3,1 -3,5 -3,8

-4,8

-7,4-8,7

-7,2

-10,7

1,0

3,95,6

4,9

7,7

-12

-10

-8

-6

-4

-2

0

2

4

6

8

2012 Q4

Internal Demand

GDP

2012 Q32012 Q22012 Q12011 Q4

Net External Demand


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Weaker growth prospects for the Euro Area

Source: European Central Bank, International Monetary Fund, European Commission and Ministry of Finance 20

Economic forecasts for 2013Volume, percentage change on preceding year

-0,3-0,2

0,10,2

0,7

1,0

Sep 2012ECB

-0,4 to 1,4

Jul 2012IMF

Jun 2012Eurosystem

0,0 to 2,0

Apr 2012EC

Mar 2013ECB

-0,9 to -0,1

Feb 2013EC

Jan 2013IMF

Dec 2012Eurosystem

-0,9 to 0,3

Oct 2012EC

Oct 2012IMF

-2,3

-1,0-1,0

0,2

-0,4

2,82,83,2

Mar 2013,7th Review

Nov 2012,6th Review

Sep 2012,5th Review

Jun 2012,4th Review

GDP PT External demand PT (goods)

E u r o

a r e a

P o r

t u g a

l

GDP EA


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led to a downward revision of economicprospects

Source: Ministry of Finance, National Statistics Institute, March 2013 21

2012 2013 2014 2012 2013 2014GDP and expenditure components(volume, percentage change on preceding year)

Private Consumption -5,6 -3,5 0,1 -5,9 -2,2 0,2

Public Consumption -4,4 -2,6 -2,0 -3,5 -3,5 -1,5

GFCF -14,5 -7,6 2,5 -14,1 -4,2 2,7

Exports 3,3 0,8 4,4 4,3 3,6 5,5Imports -6,9 -3,9 3,1 -6,6 -1,4 3,3

GDP -3,2 -2,3 0,6 -3,0 -1,0 1,2Contributions to GDP growth(percentage points)

Domestic Demand -7,0 -4,1 0,0 -7,1 -2,9 0,3

Net Exports 3,9 1,8 0,6 4,1 1,9 0,9

DeflatorsGDP -0,1 1,7 1,3 0,3 1,3 0,9

HICP 2,8 0,7 1,0 2,8 0,9 1,1

Labor Market

Unemployment Rate (%) 15,7 18,2 18,5 15,5 16,4 15,9

Employment Growth (%) -4,2 -3,9 -0,5 -4,3 -1,7 0,4

7th review:March 2013

5th review:September 2012

Economicforecasts ina context of risks anduncertaintyregardingthe

adjustmentprocess


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Rebalancing internal demand and supply

22

-2,3-2,9

0,0

2,4 1,81,50,6

-1,6

1,9

-3,2

-8

-6

-4

-2

0

2

4

6

2016201520142013201220112010200920082007

Contributions to GDP growthPercentage points

Projections for

2013-2016: Do not

considerimpacts fromstructuralreforms

Assumemoderateexport marketshare gains

GDP GrowthNet exportsInternal demand

Source: National Statistics Institute (2007-2012) and Ministry of Finance (2013-2016), April 2013


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Adjustment has come at a high social cost

Source: International Monetary Fund, Ministry of Finance 23

Real GDP growth projections

2011 = 100Unemployment rate projections

Percentage

Rise in the unemployment rate above original forecasts reflects: Lower employment given firms need to reduce costs (financing difficulties and uncertainty) Transfer of resources from the non-tradable sector to the tradable sector given the ongoing

rebalancing of the Portuguese economy

90

95

100

105

110

2011 2012 2013 2014 2015 2016

May 2011 7th review

0

5

10

15

20

2011 2012 2013 2014 2015 2016

May 2011 7th review


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in Portugal and Ireland.

Source: Ireland IMF, 9th Review (April 2013); Portugal - Ministry of Finance, 7 th Review (March 2013) 24Note: 2013-2015 - projections

Real GDP growth2007 = 100

Unemployment ratePercentage

90

95

100

105

110

2007 2008 2009 2010 2011 2012 2013 2014 2015

Portugal Ireland

0

24

6

8

10

12

14

16

18

20

2007 2008 2009 2010 2011 2012 2013 2014 2015

Portugal Ireland


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4. Fiscal consolidation


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The end -2012 fiscal deficit target was met ().

Source: Ministry of Finance, European Commission, March 2013 26

2012 General Government Deficit (*)As percentage of GDP (national accounts)

0,9

0,7

ANAConcession2012 Deficit

accordingto the

Programsdefinition

4,9

0,6

2012 Deficitestimate

(EDP)

6,6

One-off statisticalreclassifications

2012 Deficitexcluding

one-off effects

6,0

Other one-off effects

(*) After the 7 th review, the 2012 general government deficit was revised downwards in the context of the EUs Excessive DeficitProcedure. The effects on the trajectories of the general government deficit, the structural balances and the general government grossdebt will be considered in the next complete forecast presented by the Ministry of Finance.

(**) Statement by the EC, ECB and IMF on the 7th Review Mission to Portugal: http://europa.eu/rapid/press-release_MEMO-13-226_en.htm

Statement by theEC, ECB and IMF onthe Seventh ReviewMission to Portugal(

**)

:The end -2012fiscal deficit targetwas met ().
http://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htmhttp://europa.eu/rapid/press-release_MEMO-13-226_en.htm


27/48

Adjustment of the fiscal path

Source: Ministry of Finance, March 2013 27(P) Projection; not a Program target

Deficit targetsAs percentage of GDP (national accounts basis)

2013

5,5%

2015(P)

2,5%

1,9%

2014

4,0%

2012

5th review targets (Sep 2012)7th review targets (Mar 2013)

4,5%

3,0%

2,3%1,9%

Programs initial targets (May 2011)

4,5%

2,5%

5,0%

Balancing actbetween:

Economic andsocial costs of the adjustment

Inevitability of fiscalconsolidation:Portugalsfinancing needsand therepercussions onpublic debtsustainability


28/48

Structural adjustment will continue

(*) After the 7 th review, the 2012 general government deficit was revised downwards in the context of the EUs Excessive DeficitProcedure. The effects on the trajectories of the general government deficit, the structural balances and the general government gross

debt will be considered in the next complete forecast presented by the Ministry of Finance.Source: Ministry of Finance, March 2013 28

Structural balances (*)As percentage of GDP

-8,8

-6,6

-4,3-3,3

-2,1-1,6 -1,1

-6,0

-2,5

0,0

1,12,1

2,73,2

-12

-10

-8

-6

-4

-2

0

2

42010 2011 2012 2013 2014 2015 2016

Saldo estrutural Saldo primrio estrutural

2/3 of the structural adjustmentis already concluded

Structural balance Structural primary balance


29/48

Fiscal adjustments progressing in tandem

Source: Ireland IMF, 9th Review (April 2013); Portugal - Ministry of Finance, 7 th Review (March 2013) 29Note: 2013-2015 - projections

-10

-8

-6

-4

-2

0

2

4

2010 2011 2012 2013 2014 2015

Portugal Ireland-10

-8

-6

-4

-2

0

2

4

2010 2011 2012 2013 2014 2015

Portugal Ireland

Structural balancePercentage of GDP Structural primary balancePercentage of GDP


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Public debt peaking at 124% in 2014

Source: Ministry of Finance, March 2013 30

General Government Gross Debt (*)As percentage of GDP

93,5%

108,1%

120,0%

122,2% 122,3%

119,6%

115,8%

93,5%

108,0%

123,0% 122,4%123,7%

122,5%

119,4%

90%

95%

100%

105%

110%

115%

120%

125%

2010 2011 2012 2013 2014 2015 2016

6th review

7th review

(*) After the 7 th review, the 2012 general government deficit was revised downwards in the context of the EUs Excessive DeficitProcedure. The effects on the trajectories of the general government deficit, the structural balances and the general government gross

debt will be considered in the next complete forecast presented by the Ministry of Finance.


31/48

Public debt: close to Ireland, lower than Italy

Source: GR - IMF,Jan2013; IT IMF,Oct2012; PT - Ministry of Finance,7 th review,Mar2013; IE IMF,Apr2013; ES IMF,Mar2013; 31

Public Debt

Percentage of GDP

60

80

100

120

140

160

180

2010 2011 2012 2013(P) 2014(P) 2015(P) 2016(P)

Greece

Italy

Portugal

Ireland

Spain


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5. Deleveraging andfinancial stability

Portugal as a net lender for the first time in two


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Portugal as a net lender for the first time in twodecades

Source: Bank of Portugal, March 2013 33

(*) 1953 is the earliest observation available.

-16

-12

-8

-4

0

4

Current and capital account (*)

Percentage of GDP

1952 1960 1970 1980 1990 2000 2010

20121993


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Fast correction of external imbalances


Balance of Payments, key balancesPercentage of GDP

-7,7

-4,4

-0,5

1,7

2,53,1

3,6

-9,0

-5,6

0,4 1,41,9 2,1 2,4

-10,4

-7,2

-1,9

-0,30,4

0,7 1,0

-12

-10

-8

-6

-4

-2

0

2

4

62010 2011 2012 2013 2014 2015 2016

External Balance of Goods and Services

Net Lending (+) / Net Borrowing (-)

Current Account Balance


35/48

Increasingly stable banking system

Source: Bank of Portugal, March 2013 35

2010

11,511,2

9,68,7

8,17,8

10

Q4 (*)Q2Q4Q2Q4Q2

120

EightLargest

Banks

NationalBankingSystem

Q4 (*)

128

119

Q2

136

126

Q4

140

128

Q2

150

137

Q4

158

147

Q2

167

157

2011 2012 2010 2011 2012

Banking system close to 120%.

This target was excluded from the Memorandum after the 7th Review.

The 10% Core Tier 1 Ratio was reachedahead of schedule.

(*) Preliminary values for 2012Q4

Loans-to-deposits ratioPercentage

Core Tier 1 Ratio, Portuguese Banking SystemPercentage


36/48

Interest rates on bank loans still high (1/2)

Source: ECB, March 2013 36

Interest rates on MFI Loans ( 1y) to Non-Financial Corporations | New Businesses only

Percentage

0

1

2

3

4

5

6

7

8

a n - 0

7

b r - 0 7

J u

l - 0 7

u t - 0 7

a n - 0

8

b r - 0 8

J u

l - 0 8

u t - 0 8

a n - 0

9

b r - 0 9

J u

l - 0 9

u t - 0 9

a n - 1

0

b r - 1 0

J u

l - 1 0

u t - 1 0

a n - 1

1

b r - 1 1

J u

l - 1 1

u t - 1 1

a n - 1

2

b r - 1 2

J u

l - 1 2

u t - 1 2

a n - 1

3

GreecePortugalItalySpainIrelandGermanyFrance


37/48

Interest rates on bank loans still high (2/2)

Source: ECB, March 2013 37

Interest rates on MFI Loans ( 1y) to Non-Financial Corporations | Outstanding amount

Percentage

0

1

2

3

4

5

6

7

8

J a n - 0

7

A b r - 0 7

J u

l - 0 7

O u t - 0 7

J a n - 0

8

A b r - 0 8

J u

l - 0 8

O u t - 0 8

J a n - 0

9

A b r - 0 9

J u

l - 0 9

O u t - 0 9

J a n - 1

0

A b r - 1 0

J u

l - 1 0

O u t - 1 0

J a n - 1

1

A b r - 1 1

J u

l - 1 1

O u t - 1 1

J a n - 1

2

A b r - 1 2

J u

l - 1 2

O u t - 1 2

J a n - 1

3

GreecePortugalItalySpainIrelandGermanyFrance


38/48

6. Structural transformation


39/48

Increase in working days : up to 7 additional (3 vacation + 4 holidays) Reduction of restrictions to individual dismissal : based on performance Restrictions on automatic extension of collective agreements

Reduction of rents in network and sheltered sectors Electricity : -1,4Bn NPV of future payments Mobile communications networks: reduction of 80% since 2010 Pharmaceuticals : expenditure from 1,5% (in 2010) to 1,25% of GDP (in 2012)

Infrastructure PPP : -1,3Bn NPV of future payments Liberalization of the energy and gas market

Adoption of a law on arbitration to facilitate out-of-court settlement Approval of new Code of Civil Procedure , submitted to Parliament Adoption of a new Judiciary Map , submitted to Parliament Reduction of the backlogged cases

Operational balance in 2012 achieved for the State- Owned Enterprises sector as a whole New insolvency code and corporate recovery New Competition Law harmonized with the EU legal competition framework Liberalization of regulated professions access and exercise Approval of the Public Professional Associations Framework Law Accomplishment of over two thirds of the implementation of the Services Directive Reduction of firms administrative burden: licensing requirements and other legal formalities Adoption of the new Urban Lease, Renovation works and Urban Rehabilitation Laws

Implemented measures

LaborMarket

ProductMarket

Judicialsystem

Structural reforms advancing at good pace

Businessenvironment

NON-EXHAUSTIVE

39

Main structural reforms discussed during the 7th


40/48

Main structural reforms discussed during the 7thReview

40

Keys facts

Reform of severance pay

FrameworkLaw forRegulators

Reform of theCorporateIncome Tax

Importance of maintaining social consensus: social partners were consulted Agreement on new limits for severance payments , to align with EU average:

New permanent contracts: 12 days per year of serviceFor the remaining contracts, 18 days per year of service in the first 3 yearsof the contract and 12 days for subsequent years

Cap of 12 months will remain in place

Approval of a framework law against best international practices Reinforcement of the regulatory environment to protect the public interest

and to promote market efficiency Ensuring the administrative, financial and management autonomy of regulators Strengthening its organizational, functional and technical independence

Discussion of the reform of the CIT: create a modern, stable and competitivetax according to international standards

Aspects considered: i) reviewing the rate structure ; ii) redefining the tax base ;iii) reducing the costs of context ; and iv) restructuring the international taxpolicy

Presentation of a draft law by end-June, to be sent for public consultation anddiscussion

Privatization program as a flagship in the


41/48

Privatization program as a flagship in thestructural transformation agenda

Source: Ministry of Finance, January 2013 41

(1) Concession and privatization

(2) Expected completion date by Caixa Geral de Depsitos

Electricitydistribution

Energy retailand production

Maildistribution

Wastemanagement

Airinfrastructure

Railwaylogistics

Seguros

Insurance

Seguros

Energy retailand production

Air transport

(1)(2)

2013

Urban Transportation (Lisbon, Porto) Maritime Ports

Decisiveconcessions

Privatizations results exceeding expectations in


42/48

Privatizations results exceeding expectations inrevenue obtained

42

(1) List of five final bidders only

(2) Considering the closing price of the day before the Council of Ministers decision(3) Equity Value (1200M) + Concession Fee (1200M) + Pre-Existing Debt (680M)

Bidders

Revenue

Financing

Investment

% Equity

Selected bidders

40%

State Grid: ChinaOman Oil Company:Oman

EUR 593M: premium of 33.6% per share ( 2)

EUR 1000M throughChinese banks

Strategic plan fornational economydevelopment (e.g. I&Dcenter construction)

21,35%

China ThreeGorges: ChinaE.ON: GermanyEletrobras: Brazil

Cemig: Brazil

EUR 2693M: premium of 53.6% per share ( 2)

EUR 2000M throughChinese banks

EUR 2000M until 2015 inwind farms

100%

Vinci: FranceAtlantic Consortium: Germany, AustraliaBlink Consortium: Colombia, Portugal,Spain, Netherlands

EAMA Consortium: Argentina, Portugal,Spain, BrazilConsortium Zurich Airport: Switzerland,Brazil, USA (1)

EUR 3080M (3)

-

Pre-existing investment plan for ANA tobe fully respectedANA as the center of Vinci Groupsairport activity


43/48

7. Conclusion

d ld l l


44/48

0

5

10

15

20

25

J a n - 1

0

F e

b - 1

0

M a r - 1 0

A p r - 1 0

M a y - 1

0

J u n - 1

0

J u

l - 1 0

A u g - 1

0

S e p - 1

0

O c t - 1 0

N o v - 1

0

D e c - 1

0

J a n - 1

1

F e

b - 1

1

M a r - 1 1

A p r - 1 1

M a y - 1

1

J u n - 1

1

J u

l - 1 1

A u g - 1

1

S e p - 1

1

O c t - 1 1

N o v - 1

1

D e c - 1

1

J a n - 1

2

F e

b - 1

2

M a r - 1 2

A p r - 1 2

M a y - 1

2

J u n - 1

2

J u

l - 1 2

A u g - 1

2

S e p - 1

2

O c t - 1 2

N o v - 1

2

D e c - 1

2

J a n - 1

3

F e

b - 1

3

M a r - 1 3

A p r - 1 3

Treasury Bond Yields at 2010 levels

Source: Bloomberg (last observation: April 9 th , 2013) 44

Treasury Bonds yieldsPercentage

9/10 May 2010:ExtraordinaryECOFIN meeting:approval of the supportpackage for Greece

5 May 2011:Formal Announcement of Portuguese Program

23 Jan 2013:Return tobond markets

6 Sep 2012:Announcement

of ECBs OMT

Compliance with all the quantitative targets of the


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Compliance with all the quantitative targets of theProgram


(*) Targets according to the definitions set in the ProgramAll the quarterly targets for the budget deficit on a cash basis and for the public debt ceiling were also met

7,38,4

20122011

168 177

2011 2012

4,44,9

2011 2012

Budget deficit

National accounts basis (*) Cash basis (*)Public debt (*)

Percentage of GDP Billion eurosBillion euros

176

Limits of the Program

18010,39,0

5,9

5,0

d h li i h h P


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and the strong compliance with the Program

Source: European Commission, March 2013 46

Status of measures required in each reviewPercentage

7% 8% 11% 9% 14% 12%

76%

16%

2nd Review

61%

31%

1st Review

72%

28%

5th Review

21%

16%

4th Review

76%

17%

3rd Review

73%

91%

7th Review

60%

27%

6th Review

64%

Observed/partly observed

Ongoing

Not observed/delayed

(*) Preliminary values for 7 th Review

(*)

are key to the European support in regaining


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y p pp g gmarket access.

Source: IGCP (last update: January 23 rd, 2013); Eurogroup 47

* Beyond 2028 -- 2032: 5,20 bn . 2037: 6,97 bn . 2038: 4,40 bn . 2042: 1,50 bn . 2050: 0,01bn ** Eurogroup Statement on PT and IR: http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/

Substantial increase of refinancing needsin 2014-2016 and 2021

Favorabledevelopments inPortugal andIreland:

Significantprogress ineconomicadjustment

Strongcompliance withthe Program

Ongoingstrategy toregain marketaccess

The Eurogroup ministersare determined tosupport Ireland's andPortugal's efforts toregain full market accessand successfully exit theirwell-performing

programmes [ and ] have agreed to anadjustment of thematurities of the EFSFloans to both countries inorder to smooth the debtredemption profiles of those countries. (Mar 16 th , 2013**)

Technical details to be further discussed

Redemption profile *

Billion euros

0

3

6

9

12

15

18

21

24EFSF

EFSM

IMF

Other medium andlong term debt

T d t i bl th d j b ti
http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/http://www.eurozone.europa.eu/newsroom/news/2013/03/eg-statement-portugal-ireland-16-03-13/


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Balanced budget,reduction of public debtand financial stability

Improving perspectives forthe EA: OMT, Banking Union,Agreement on assistance toGreece and Spain

Towards sustainable growth and job creation

Confidence and Credibility

Creating an open andcompetitive economy:

Positive impact from

ongoing structuralreforms Portugal as an attractive

location for investmentand foreign anddomestic capital

Solidfoundations

foreconomicrecovery

Gradually achievingbetter financing conditions:

Main driver in the presenteconomic context isfinancial

Portugal is reversing thesudden stop

a present a cao gaspar abril 2013

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