This document discusses Portugal's economic and political crisis. It outlines several structural problems in Portugal like low skills/wages and external pressures from European integration. During 1985-1998, Portugal saw high growth but since the financial crisis and Troika austerity imposed since 2011, it has experienced tax increases, wage/pension cuts, privatizations, and increased retirement age. While GDP is growing, unemployment remains high. The austerity has not solved the public debt issues, which may reach 80% of GDP in 20 years unless surpluses of 5% and growth of 4% are achieved annually. The document argues for moving beyond the Troika memorandum and austerity towards debt restructuring and productive reconstruction.

1. What NOT to do in
case of crisis
Or, the current economic and political situation
in Portugal

2. In the beginning were the
structural problems…

3. • Low qualifications, low wages, low value added
activities
• European integration and external pressures
• National bourgeoisie
• The euro?!
• Did we loose “competitiveness”?
• Did we have a real estate boom?
• Are Portugal – Greece – Spain – Ireland the same?

5. Variação em %
1985-19 98
PIB real
Consumo
Investimento
Importações
Exportações
Ale manha
35,8
33,8
46,8
110,6
97
Finlândia
32,2
28,4
17,3
90,5
116,7
Holanda
48
37,4
74,2
119,4
121,4
França
32,9
28,9
38,4
105,6
110,1
Portugal
63,2
66
151,7
270,3
133,8
Espanha
49,2
51,7
96,1
328,8
155,3
Grécia
24,1
32,4
34,1
137,4
92,4
Irlanda
109,31
59
121,2
276,4
354,1
1 999-2008
PIB real
Consumo
Investimento
Importações
Exportações
Alemanha
14,9
6,5
6,3
63,3
92,7
Finlândia
32,3
26,7
32,2
87,1
79,7
Holanda
21,4
18,1
14,5
53,7
57,8
França
Portugal
17,6
12,4
18,7
17,4
30,9
-5,5
50,6
34,5
33,6
47,6
Espanha
34
46,8
46,8
70,1
46,2
Grécia
38,8
40,9
57,5
58,2
46,9
Irlanda
53,8
38,6
41,1
73,9
75,2

6. Public finances

7. • Structural:
• Dismal growth
• De- fiscalisation
• Privatizations
• PPPs
• Conjunctural
• Budget stabilisers
• Speculation
• Bank bailouts

12. REVENUES Vs. EXPENDITURES

13. • TRUE, THE PORTUGUESE ECONOMY SUFFERS
FROM SEVERAL STRUCTURAL PROBLEMS (WHO
DOESN’T?!)
• FALSE, THESE ARE NOT RELATED TO HIGH
WAGES, PUBLIC SERVICES OR A STRUCTURAL
EXCESSIVE PUBLIC DEBT
But then came the financial
markets…

15. AND TROIKA

16.  Austerity since 2011: 23 bn (14% GDP)
 Taxes
 Wages/pensions
 Public services
 Privatizations
 Structural measures
 Pension age to 67
 End of collective contracts
 Unemployment benefit rules
 Increased labour time

17. How NOT to adjust public
finances

20. LONG TERM UNEMPLOYMENT

21. GDP – quarter % change (yoy)

22. The new “economic miracle”

23. GDP – quarter % change

25. • GDP growth? (constitutional court)
• Decrease in unemployment?
• Exports?

26. State budget: The nightmare
before christmas

27. • Austerity: 3,7bn
• 3,2bn expenditure
• 70%  Wages and Pensions (2,2bn)
• 30%  Health, Education, Social Security
• 0,5bn revenues
• 0,15bn (150m)  banks and energy corporations (4% total)
• 0,35bn (350mio)  taxes
• 1500bn for swaps
• The new corporate tax reform

29. Public Debt: the nighmare
after christmas

32. PUBLIC DEBT AT 80% IN 20 YEARS
HOW TO SQUARE A CIRCLE?
 Primary surpluses around 5%
 GDP growth around 4%
 Interest rate burden

33. • 2nd memorandum vs. something else
• Fiscal compact
• Constitution in danger
Life after Troika

34. • Debt restructuring
• Productive reconstruction
• End of austerity
Life after Troika