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Needs meet cost

01 December 2005

Signs are that the Portuguese PIIP plan will deliver on some of its promise over the next three years. But while the Lisbon Airport deal and the wind sector look like forging ahead, there are still reservations over the viability of deals like RAVE and the future of the SCUTs. By Sean Keating.

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When the new Eu25 billion ($30 billion) 2005-2009 Portuguese infrastructure investment programme – Programa de Investimentos en Infrastructuras Prioritarias (PIIP) – was announced in June it was the first sign that the political stasis that has afflicted the Portuguese public-private-partnership (PPP) market, along with the economy, for the past four years is over.

Portugal needs PPP – no argument – if it wants the infrastructure to fuel much-needed economic growth. In August the EU gave Portugal three years to cut its deficit – which stands at 6.2% of GDP, more than double the 3% limit imposed by the EU's Stability and Growth Pact – and six months to come up with measures that would cut the deficit by the equivalent of 1.5% of GDP in 2006 and by a further 0.75% in 2007 and 2008.

The socialist government of Jose Socrates has responded with a budget for 2006 that slashes state spending next...

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