Over the last two years, Banco de Portugal has adopted salary containment and cost reduction measures. This decision by the Board of Directors derives from the understanding that the Bank must not distance itself from the effort Portuguese society is making to overcome the economic and financial difficulties faced by our country.

These measures aimed to achieve results that are equivalent overall to those defined in the State Budget for the public sector and were set autonomously, within the constraints arising from the Labour Code and the relevant collective bargaining regulation instruments, safeguarding the Bank's independence of decision-making and, in particular, taking into account its institutional nature.

Given the amendments introduced in the interim by Law No 66-B/2012, approving the State Budget for 2013 (State Budget Law), the Board of Directors has decided the following, thereby continuing its policy:

• To suspend the holiday subsidy for employees, under Article 29 (8) of Law No 66-B/2012, approving the State Budget for 2013. (1)
• To maintain the voluntary suspension of the holiday subsidy for the members of the Board of Directors and the reduction of their remuneration, in line with the measures decreed for the public sector.
• To maintain the retention of part of the holiday subsidy for retired employees and pensioners as provided for in Article 77 of the State Budget Law (2), pending decision of the courts on the legal issue posed by application of the law.
• To introduce extraordinary measures for situations of particular financial vulnerability among current and retired employees on low incomes.

Banco de Portugal's independence, enshrined in the Treaty on European Union and in the Statute of the European System of Central Banks and reaffirmed by the ECB following consultations undertaken by the Assembly of the Republic, cannot be seen as a factor for distancing the Bank from the austerity imposed on the population as a whole.

Rather, that independence means that the Bank, through the Governor and the Board of Directors, shall be responsible to the country for following an appropriate remuneration policy, which reconciles containment measures with measures for promoting merit and quality of performance. In this way, Banco de Portugal intends to meet its current and future responsibilities within the Eurosystem, while also responding to the additional demanding tasks arising from the current crisis.

Lisbon, 4 January 2013

(1) Under the terms of Article 29 (8) of Law No 66-B/2012, "Within the independence guarantees established in the treaties governing the European Union, Banco de Portugal takes into account the overall cost containment drive in the public sector reflected in this law, and is empowered by this article to decide, as an alternative to the previously decided measures of an equivalent effect, to suspend the holiday subsidy or any payments corresponding to the Christmas subsidy to its workers during 2013, by derogation from the obligations provided for in labour law and the relevant collective bargaining regulation instruments".
(2) Article 77 lays down the suspension of 90% of the holiday subsidy paid "directly or by pension fund intermediary, or by any public entity, irrespective of the nature and degree of independence or autonomy", and the amount of that subsidy must be presented to the Caixa Geral de Aposentações (the Portuguese civil servants' retirement and survivor pensions fund).