17 / 150
17
In May 2014, the Portuguese government an-
nounced the end of the Troika’s programme. For
Portugal, this programme, which had been im-
plemented three years previously, represented
an entrenchment of the approach to the crisis
adopted by the government in May 2010, based
on austerity and “internal devaluation”, in ac-
cordance with the decisions of the European
institutions.
During these three years, the programme
has been subject to close quarterly monitoring.
However, oddly enough, after it ended there
was no call from the Portuguese government or
the IMF or the European Union or the European
Central Bank for an in-depth assessment of the
programme comparing its objectives to the re-
sults obtained.
The pages that follow only claim to be an
outline of what such an assessment could and
should be and what might result from it. The
assessment should start by identifying the ob-
jectives of the rescue programme and the logic
underlying it. It should then look at the results
obtained and compare them with the objectives
and forecasts.
We start with a brief survey of the IMF’s diag-
nosis and the objectives of the rescue programme
as they were presented in the memorandum
signed in 2011. Since any assessment involves a
prior selection of the most important aspects,
depending on the assessor’s evaluation criteria,
we have broken down the exercise presented
below into two parts. The first evaluates the re-
sults of the bailout based on the programme’s
own criteria, and the second looks at other as-
pects that were omitted or underestimated by
the Troika but are nonetheless important.
The objectives and logic of the portuguese
bailout
The bailout programme was based on a diagnosis
that highlighted the aggravation of the imbal-
ances in the Portuguese economy after joining the
Euro. According to the IMF
1
, a substantial drop in
interest rates, linked to the adoption of the Euro,
led to a substantial real appreciation, created fiscal
and external imbalances and reduced savings.
A loss of competitiveness, unsustainable fiscal
1
IMF (2011), “Request for a Three-Year Arrangement Un-
der the Extended Fund Facility”, IMF Country Report No.
11/127.
Portugal 2014:
the consequences of a bailout
Manuel Carvalho da Silva, José Castro Caldas and João Ramos de Almeida