Ultima versão do relatório de risco de crédito de Portugal emitido pela Coface

1. Portugal
Population GDP
10,658million 241,921US$billion
@rating Business climate
country assessment
MAJOR MACRO ECONOMIC INDICATORS
2009 2010 2011(e) 2012(f)
GDP growth (%) -2.9 1.4 -1.6 -4.0
Inflation (yearly average) (%) -0.9 1.4 3.6 2.7
Budget balance (% GDP) -10.1 -9.8 -4.0 -5.5
Current account balance (% GDP) -10.9 -10.0 -6.7 -4.2
Public debt (% GDP) 83.1 93.4 112.8 120.0
(e) estimate (f) forecast
STRENGTHS WEAKNESSES
Good logistics and communications infrastructure Specialisation in low value-added sectors, highly exposed to
international competition
Attractive tourist destination
Productivity and competitiveness eroded
Beginning of sectoral and geographic diversification
Heavily dependent on European economic conditions
Absence of a property bubble
Weak government finances
High level of public and private debt
RISK ASSESSMENT
A recession which is expected to worsen as a result of austerity and slowing European demand
The economy plunged back into recession in 2011 because of the fall in domestic demand, itself largely caused by the hardening of fiscal austerity
measures. The contraction in imports and the continued growth of exports, however, made it possible to limit the decline in GDP.
The recession is expected to deepen in 2012. Consumption is expected to contract further due to the higher tax burden and further spending cuts, in
a context already marked by high household debt and high unemployment (14% of the labour force). Flagging demand, sluggish credit, low
profitability and companies' poor cash flow raise fears of a further fall in investment. Moreover, demand from the European Union (75% of exports) is
expected to shrink appreciably, which will adversely affect sales abroad. Nevertheless, with imports continuing to decline, the contribution of foreign
trade to growth, though falling, will remain positive. The current account deficit is thus likely to have declined sharply in 2012.

2. Large imbalances which have forced the country to seek international aid
During the decade before the crisis, the loss of competitiveness and the allocation of resources at the expense of the tradable sector led to a growing
imbalance in the external accounts. Public debt increased appreciably as a result of an expansionary fiscal policy. Low interest rates and easy
access to finance led to a sharp rise in private sector debt (260% of GDP). Despite the rapid introduction of the initial fiscal consolidation measures
and the absence of a property bubble, such as to inflict heavy losses on the banking sector, pressure on the debt market escalated sharply and
Portuguese bond yields reached record levels. After Greece and Ireland in 2010, Portugal was forced to resort to aid from the EU and the IMF in May
2011 (€78 billion). The country is sticking to the objectives of its rescue plan but further aid, even a restructuring of its debt, cannot be totally ruled
out. The lack of growth feeds concerns about the viability of the public debt and the lack of investor confidence, if it continues, could compromise the
country's return to the bond market within the time foreseen, before an important repayment date (September 2013).
Meanwhile, there is need for improvement on many fronts, among them the implementation of reforms aimed at getting rid of rigidities and
bottlenecks responsible for sluggish growth. What is needed in particular is to counter rigidities in the job market (reforms already ongoing),
excessive red tape, insufficient competition and a lack of skilled labour, which explain the low productivity. Moreover, after the outbreak of the
sovereign debt crisis, the banking sector saw its domestic sources of finance dry up and it became very dependent on cash injections from the ECB.
The sector is also greatly exposed to sovereign debt, mainly Portuguese, having, for this reason, significant capital needs.
Businesses having a tough time
Payment failures recorded by Coface shot up in 2011. At the same time, company insolvencies increased sharply. The sectors most affected were
those of manufacturing, construction and services including wholesale and retail trade. Turnover growth in the manufacturing industry gradually
declined and the contribution of the domestic segment even became negative. The best performing export sectors were the subsectors of base
metals, chemicals, automotives, foodstuffs and textiles. Mining exports grew. Construction and services declined with the exception of hotels, air
transport and logistics, whose growth was spurred by foreign demand.
PAYMENT INCIDENT INDEX
MEANS OF PAYMENT AND COLLECTION METHODS

3. PAYMENTS
Bills of exchange are widely used for commercial transactions in Portugal. In order to be valid,
however, they are subject to stamp duty whose rate is set each year in the country's budget. The
current rate of stamp duty is 0.5% of the amount of the bill, or a minimum of one Euro.
A bill of exchange is generally deemed independent of the contract to which it relates.
While creditors, in the event of payment default, are not required to issue a protest notice before
bringing an action to court, such a notice can be used to publicise payment default and pressure the
debtor to honour his obligations, albeit belatedly.
Cheques too are widely used. They are payable on presentation and subject to the minimum stamp
duty that is borne by the bank. It is no longer an offence to issue uncovered cheques as a guarantee
for staggered payments.
In the event of default, cheques, bills of exchange and promissory notes offer effective guarantees to
creditors as they are enforceable instruments in law and entitle holders to initiate “executory
proceedings”. Under this process, creditors may petition the court to issue a writ of execution and notify
the debtor of such an order. Where the debtor still fails to pay up, creditors may request the court
officer to issue an attachment order against debtor’s property.
Flexible and efficient bank transfers via the SWIFT electronic network for which large Portuguese
banks are equipped, are also used for a growing proportion of payments.
DEBT COLLECTION
Out-of-court collection starts with the debtor being sent a final demand for the payment of the principal amount, plus any default interest that may
have been agreed between the Parties, within eight days.
Except when stipulated otherwise in the commercial agreement, the rate of interest applicable is the European Central Bank's refinancing rate raised
by seven percentage points.
Since 1st October 2004, interest rate set henceforth by decree of the Treasury Department, will be published in the Diário da República during the
first fortnight of January and July each year and be applicable for the six coming months.
The order to pay procedure (injunção) applicable to commercial claims considered uncontested – and, since 19 March 2003, whatever the amount
involved – is heard by the court in whose jurisdiction the obligation is enforceable or the court where the debtor is domiciled.
Since September 2005, the injunction may be served as an electronic file.
The National Injunctions Office (Balcão Nacional de Injunções), located in Oporto, has exclusive jurisdiction throughout the country with the
electronic processing of the order to pay procedure.
For disputed claims, creditors may initiate formal and costly “declarative proceedings” (acção declarativa), lasting about two years, to obtain a ruling
establishing their right to payment. They must then initiate the "executive proceedings" (acção executiva) to enforce the court’s ruling.
Under the revised Code of Civil Procedure introduced in January 1996, any original deed established by private seal (i.e. any written document
issued to a supplier) in which the buyer unequivocally acknowledges his debt is henceforth deemed an instrument enforceable by law.
This provision aims to encourage buyers to comply with contractual undertakings and offers creditors a safeguard against protracted legal action.
Legal recourse in civil matters was revised in October 2006 to allow the judge to adapt the procedure to the needs of each case and accelerate the
pace of the proceedings.
As well, since 31st March 2009 a decree-law aims to improve the process of the executive proceedings by suppression of some procedural
formalities and by a better distribution of tasks between the judge of execution and the servant of execution (agente de execução).
As Portugal does not have commercial courts – other than those in Lisbon and Vila Nova de Gaia (Oporto), which deal with actions to void partner
resolutions, insolvency proceedings, dissolution of companies and protection of industrial property – courts of first instance (tribunal de comarca)
have generic competence in that regard.

4. The Varas Cíveis, civil courts with a three-judge panel presiding, hear large commercial claims exceeding 30,000 Euros.