The White Elephants

These last two decades have been marked by the resounding rise in the official and unofficial public debt, that is, the debt that is still coming.

These last two decades have been marked by the resounding rise in the official and unofficial public debt, that is, the debt that is still coming.

Economically unfeasible projects or bad political decisions cost the country tens of millions of euros, without any liability being effectively established.

We can start with Public Private Partnerships in infrastructures or in the renewable energy business, with guarantees of profitability well above the interest rates and with clauses that left little room for maneuver for its renegotiation, including the nationalization of BPN, with costs over 7 thousand million euros, not forgetting the nationalization of Novo Banco that cost the country more than 15 billion, considering the negative results and debt operations, or even the Resolution Fund, that black hole, where everything fits - from Novo Banco to Banif, going through what we do not know will have to fit.

Not recovered from these tragedies, we have two more elephants to worry about. A TAP that will cost no less than 4 billion euros, and a green hydrogen project that will cost no less than 7 billion euros, knowing in advance that it will cause losses in the next decade. However, the word “green” makes all the difference as it is the catalyst for the widespread acceptance, without question, of something that is unknown and that we believe to protect the environment.

Looking back, you cannot envision a single project where the Portuguese taxpayer is winning. The latter is only required more and more taxes, without guaranteeing the good management of public funds. The lack of accountability for managing the public good and scarce, like money, has become commonplace, perhaps due to the discredit and slowness of justice.

But we still have a big white elephant, which is well disguised, but will end up in the hands of the taxpayer - the Resolution Fund. In its genesis, it would be the financial system that would pay the losses caused by the need to intervene in Novo Banco, so there would be no consequences for the taxpayer other than the momentary increase in public debt, by the fund's financing. But it was clear from the last statement of accounts that his debt is unpayable. If not, let's see. The difference between financial sector revenues and interest charges totals 134 million euros. As the hole in the Resolution Fund will reach 8 billion euros, then this debt will only be paid in 59 years or in 2079!

Considering the size of these numbers, the uncertainty that hangs over the financial sector, namely the fragility of its capital structure taking into account the effects of the pandemic, as well as the increasing annual cost of the charges, I fear that this will be a hole that will pass to the taxpayer.

We continue to postpone problem solving, this time with the illusion that European funds will erase poor and often conflicting public management. It remains to be seen how long.


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