The Economic and Social Council of Portugal (ESC) warns that the return of the country to the financial markets will not mean that the serious problems affecting the Portuguese economy will be solved. Those issues will continue to negatively condition economic growth and job creation. Indeed, some of them - such as unemployment and public debt as a percentage of GDP – have been aggravated by the implementation of the Economic and Financial Adjustment Programme (EFAP) sponsored by the IMF, the ECB and the European Commission.
The ESC finds four major mistakes that have conditioned the deployment of the Memorandum of Understanding - signed in the framework of the EFAP - and the policies resulting from it:
- An inadequate characterization of the crisis which underestimated its structural dimension as well as the country’s high levels of indebtedness which affected not only the State but also companies and households;
- An underestimation of the importance of domestic demand and of the negative impact of its contraction on growth and employment;
- A "state reform" that ended up being limited to trimming public spending indiscriminately;
- A minimal concept of "structural reforms of the economy" achieved mainly by internal competitive devaluations.