In conversation with Mario Centeno

By: Editor In Chief
    
Sun 27 March,2016

PORTUGAL CONSELHO DE MINISTROS
Mario Centeno, Portuguese Finance Minister




Filed Under: Finance & Budget

Mário Centeno was born in Olhão, in 1966. Graduated in Economics by ISEG-UTL in 1990, he has two Masters – the first one in Applied Mathematics, by ISEG-UTL in 1993, the second one in Economics, by Harvard University, USA, in 1998 – and a PhD in Economics, by Harvard University, USA, finished in 2000. He is deputy of the Assembly of Republic. He is consultant of Portugal's Central Bank since 2014. He is Professor at ISEG, Universidade de Lisboa.

He was assistant director of Banco de Portugal Economics’ Department between 2004 and 2013.

He directed the Macroeconomics Statistics Development’s work group in the Superior Statistics Council between 2007 and 2013.

He was member of the Economic Policy Committee from the European Commission between 2004 and 2013.

He was economist of Portugal's Central Bank between 2000 and 2004.

He was member of the commission responsible for the White Book for Labour Relations in 2006 and 2007.

He is member of the Editorial Board of Portuguese Economic Journal since 2001. He was member of the Executive Committee of European Association of Labor Economists from 2003 to 2005.

Author and co-author or several scientific publications, books and book chapters related to his areas of interest, such as Labour Economy, Econometrics, Microeconomics and Theory of Contracts.

Portugal, obviously got high debt levels, both private and public still, and a number of the measures, like increasing the minimum wage, reducing the working week for public sector workers, these are all measures that look like you are unwinding the benefits and things that have been achieved over the past 3-4 years.

Well I'll let you know first that one of the measures that you mentioned will be implemented with very strict conditions on the cost on public finances which is the shortening of the week, the shortened working week of civil servants.

But why do that anyway?

You know, we need to create a process that brings about new productivity levels in Portugal, this is of upmost importance for us. We are very focused on reducing segmentation on the labour market, on implementing a number of measures that allow firms and workers to match in a better way, the reform of public administration is very important for the Portuguese economy to grow stronger, this is included in a much wider package and it's a pity if it's not written in this context and we really want to make this information available and the way we are going to implement it will be strictly under these conditions.

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The most important thing for you arguably is for you to maintain that investment grade rating because that's the key to continuing ECB bond purchases, is that the primary focus here?

 Of course we want to improve the way the market sees us, as an economy, as a country and of course the public & private debt of Portugal. This requires very strict commitment and very strict action in the budgetary front and we will do it.

One thing that spooked investors was to bail-in senior bond holders of Novo Banco. Some have said you were picking fights with investors, what happened? Was this the only choice?

Well that as everybody knows was the decision of the central bank in the context of the recapitalisation of Novo Banco, we have, I believe now have to go to the market and to explain this was a single event, we are working together with the ECB and the Portuguese financial sector to strengthen to guarantee that this type of event will not occur. We kind of understand it, but we need to work with them as well in this direction.

Do you think the bail in that we saw is part of what's spooking the broader European banks at this moment?

That I don't, I can't tell you precisely, it's something with volatility in the market and the problems surrounding the stock markets in Europe, actually everywhere in the world right now, it's a problem that policy makers need to take very seriously and I think this type of decisions that were taken today in the Euro group the ones that reinforce the confidence and try to minimise the risk, it's the best thing we can do to to improve this condition.

One more question about the potential re-privatisation of, or the removal of the privatisation of TAP Portugal - another concern for investors here.

That's a great opportunity for me to explain it because actually the company remains private. Actually the rights of the private owners of the company were reinforced in terms of the returns for their investments. The government was interested only with its operation which was a negotiation affair, a market negotiation with the owners of the company to have something to say on the strategic plan of the company, not on the daily basis of the running of the company, because there will be no presence of the government in the executive board of the company, it's only on the strategic.

TAP Portugal is very important, strategically for the country because of the large community of Portuguese people around the world and also because of tourism. We go along with the present strategic plan, actually we are not putting it into question, not even of course the legal rights and the expected value that those who invested and continue to invest on TAP, we expect and, so this is in some sense and in a nutshell, we didn't change the nature of the company as a private company, it will continue to be so and the presence of the government is only restricted to the strategic review of the company.




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