Well before the global financial crisis began in 2007, a number of ticking time bombs lay buried in Portugal’s economy. In late 2008, before the European sovereign debt crisis had struck fully in any country, the Portuguese government bailed out two Portuguese banks for the losses they had incurred from fraud and mismanagement. Moreover, in 2009, the deficit reached 9.4%, and a year later unemployment hit nearly 11%. Excessive public debt, coupled with careless financial management, shook Portugal’s economy.
The government passed a variety of austerity measures over the course of 2010. In addition to budget cuts, government wages were frozen, as well as caps placed on public sector wages. The government also introduced a tax hike on high incomes and a privatisation plan. In April 2011, the government asked the EU for a bailout, which was granted a month later by the EU and IMF. Portugal received 78 billion euros ($116 billion) over three years.
But the crisis, and the government’s response to it, led to considerable discontent amongst citizens and MPs. The austerity measures of 2010 generated much antipathy towards then-Prime Minister Jose Socrates, who was ousted from office in a no-confidence vote in March 2011.
Governmental instability persists: an anti-austerity coalition was prevented from taking power by President Cavaco Silva in October 2015, but a no-confidence vote a month later dissolved the sitting right-wing government. In addition, a number of high level bankers, such as the former CEO of Banco Portugues de Negocios, and the head of Banco Espirito Santo, have been arrested for fraud and money-laundering.
Population: 10,825,309 (July 2015 est.)
|GDP||$200.6 billion||$244.5 billion||$289.8 billion|
|Public Debt (% of GDP)||63.9%||76.8%||129%|
|December 2008||Banco Portuges de Negocios (BPN) and Banco Privado Portugues (BPP) bailed out by Portuguese government|