Portugal. “It has been a very terrible year,” noted Portuguese Prime Minister Pedro Passus Coelho without a whim when his party gathered late last summer in the Algarve. He could have added that it has been three terrible years for Portugal and that more sacrifices will be required by the Portuguese, before the country is out of the crisis.
According to Countryaah, Portugal’s domestic policy and social life were marked throughout the year by the economic crisis and the austerity policy that the country’s government has been forced to receive from the world’s emergency loans. It was in 2011 that Portugal received a conditional loan of EUR 78 billion from the EU and the International Monetary Fund (IMF). Portugal then became the third crisis country after Greece and Ireland. In return, the country has been forced into cuts in the public sector, labor market liberalization, wage cuts and tax increases.
When the emergency loan was granted in the spring of 2011, the socialists ruled the country. After general elections in the summer, Portugal received a bourgeois coalition government under center-right politician Pedro Passus Coelho, whose main task now was to meet the tough demands set by the international lenders.
In 2013, unemployment rose to a record high of 16%, a figure that for young people under 25 came to close to 40%. At the same time, wages were lowered for those who worked, resulting in a sharp increase in the proportion of Portuguese who testified to a lack of money for life’s emergency.
To reduce the social tensions that followed the crisis, the country’s President Aníbal Cavaco Silva, by virtue of his powers, tried this summer 2013 to get the two bourgeois government parties and the socialist opposition to work together on austerity policy. But the socialist leader, Antonio José Seguro, demanded a halt to the crisis policy, and the president’s attempt to unite failed.
Instead of a gathering across the block borders, during the summer there was a split in the bourgeois coalition government. Two ministers resigned, and a government collapse seemed to stand at the door. Prime Minister Coelho, however, managed to save the government by promoting one of the defectors, Foreign Minister Paulo Portas, who was now allowed to become Deputy Prime Minister responsible for coordinating economic policy.
The result of the crisis in general and the high unemployment in particular was that just over 100,000 Portuguese emigrated during the year, draining the country on well-educated labor. Emigration is a particularly sensitive topic in Western Europe’s poorest country with a past history of mass migration. It was only after the Nejlikere revolution in 1974, when the dictatorship was overthrown, that emigration ceased on a large scale.
After three years of austerity, popular dissatisfaction has grown stronger, which was reflected in the results of the municipal elections held in September. The bourgeois government parties suffered great losses, while the socialist opposition won important victories. But the Socialist Party’s success was limited by the fact that an unusually large number of independent candidates voted and won the votes of those voters who, in the light of the crisis, wanted to show their dissatisfaction with all the established parties.
Despite dissatisfaction in society, the government was able to get through its budget for 2014 through its satisfactory majority in Parliament. The hope in Portugal is now that the budget will be the last steel bath before the country is out of the crisis. The budget aims to reduce the budget deficit to 4% of GDP in accordance with the requirements of the lenders. The cuts amount to EUR 4 billion and affect both salaries of public employees and pensions.
For the first time since 2010, some economic growth is foreseen in the coming year, and Portugal hopes to be able to borrow on the market even before the international emergency loans expire in June 2014. Loan guarantees from the EU rescue fund and the European Central Bank may be needed with the requirements for continued tightening that can then follow.