OECD wants emphasis on short term help for Portugal

BUDAPEST (Reuters) – Measures taken by Portugal to address its fiscal woes were not given enough time to show results and emphasis should now be placed on solving short term liquidity problems, OECD head Angel Gurria said on Thursday.

Gurria said steps announced by Portugal, including freezing the number of public servants and wages, as well as other cuts in spending could not produce results so swiftly and there was a risk of a liquidity problem turning into a solvency challenge.

“It is well-known that there are very high maturities in April as well as in June,” Gurria told a news conference in Budapest.

“My impression is that there will be, without losing track of the medium and the long term, there will be emphasis in solving the more short term maturities so that there is time,” he said.

Gurria added that he was confident the European Union, the International Monetary Fund, the European Central Bank, as well as Portugal itself had the necessary expertise and firepower in order to tackle the situation.

“I have said publicly that this was a tragedy because it was … self-inflicted. A bad situation was made worse by the political decisions,” Gurria said.

He said it was too early to talk about the size of aid for Portugal, adding that it would also depend on the country’s own fiscal consolidation program.

“Until very very recently Portugal said we would not go to the IMF or to the EU so a detailed plan of adjustment will take weeks, maybe longer together with the decision which the people will make on who is going to be running Portugal,” he said.

Gurria said there was no debt crisis in Europe, only some countries struggling with liquidity problems.

“One derived from fiscal, which is the case of Greece, one derived from bad regulation and supervision of banks, which is the case of Ireland,” Gurria said. “I think those are the two cases, which are very very dire, the rest, not the same.”

(Reporting by Gergely Szakacs; Editing by Toby Chopra)

OECD wants emphasis on short term help for Portugal