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Portugal unveils new austerity measures to appease the troika

FXstreet.com (Barcelona) - Troika inspectors arrived in Lisbon on Monday in order to carry out the seventh review of the country’s bailout program, since it had received 78 billion euros of aid in 2011.

Portugal had to come up with new austerity measures to meet the budget gap of about 1.3 billion euros, which emerged after the Portuguese Constitutional court ruled that four of the measures proposed by the PM Pedro Passos Coelho’s government were illegal.

Currently the 2 billion euro bailout tranche is blocked. If the Troika’s review has a positive conclusion, the money will be released and Portugal will also have a better chance of obtaining the 7 year loan repayment extension, approved on Friday by Ecofin.

Passos Coelho said today that the additional 600 million euros would come from cuts in healthcare, education , social security and public services and another 600 million euros from reductions of administrative costs. These new austerity measures have been heavily criticized by the left-wing opposition and labor unions.

Forex Flash: India WPI supports RBI rate cut in May – TD Securities

With the publication of a WPI in deceleration from 6.84% Y/Y in February to 5.96% in March, below the consensus expectations for 6.27%, TD Securities analysts observe that the trend has been for lower WPI in the last three years, mostly driven by the tight monetary policy and the sharp economic slowdown recently. “This means that WPI is now within the RBI’s unofficial ‘comfort zone’ of 4-6% and supports rate cuts at the next RBI meeting in May”, wrote analyst Jacqui Douglas. “However, inflation remains volatile and risks of resurgence remain, especially on bad weather conditions. Also, with CPI hovering above 10%, we think that RBI will hold a cautious stance”, Douglas added.
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