Economic Adjustment Programme for Portugal

A set of reputed economists (including former Prime Minister and eventual President Aníbal Cavaco Silva) pointed out to a rigid labor market, overstaffing in the public sector and the excessive size of the Portuguese government whose total expenditures overtook 45% of the GDP in 2005.

From the perspective of Portugal's industrial orders, exports, entrepreneurial innovation and high-school achievement, the country matched or even surpassed its neighbors in Western Europe.

[13] In order to accomplish the European Union/IMF-led rescue plan for Portugal's sovereign debt crisis, in July and August 2011 the new government led by Pedro Passos Coelho announced it was going to cut on state spending and increase austerity measures, including public servant wage cuts and additional tax increases.

The Portuguese government also agreed to eliminate its golden share in Portugal Telecom which gave it veto power over vital decisions.

This led to a flood of specialized technicians and top officials leaving the public service, many looking for better positions in the private sector or in other European countries.

[17] In December 2011, it was reported that Portugal's estimated budget deficit of 4.5 percent in 2011 would be substantially lower than expected, due to a one-off transfer of pension funds.

[21] In January 2013, the European Commission approved, under EU state aid rules, a rescuing recapitalisation totalling €1.1 billion granted by Portugal to Banco Internacional do Funchal S.A. (Banif) for reasons of financial stability.