Portuguese Controversial Budget to be Decided in Court

The Portuguese president has said that he will send this year’s controversial budget to the Constitutional Court.

Aníbal Cavaco Silva said the budget didn’t treat citizens fairly, and hit some of them worse than others.

The right-of-centre government has argued that the unprecedented tax increases the budget contains were necessary to meet the terms of the country’s eurozone bailout.

It is only the second time a Portuguese head of state has made such a move.

For most Portuguese workers the tax rises that came into effect on January 1 are equivalent to more than a month’s wages.

President Cavaco Silva made the surprise announcement in his New Year’s speech, the day after signing the budget into law.

“On my initiative, the Constitutional Court will be called on to decide on the conformity of the 2013 state budget with the constitution of the republic,” he said.

In his speech he also said the country was in a vicious circle of austerity and recession and acknowledged that Portugal’s foreign debt, now twice as high as Portugal’s annual output, was unsustainable.

The opposition Socialists had already questioned the validity of the tax hikes and had threatened to take them to the Constitutional Court if the president did not.

via BBC

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza