Policy Performance


Economic Policies

With a new left-leaning government promising to “turn the page” on austerity, Portugal falls into the bottom ranks internationally (rank 38) with respect to economic policies. Its score on this measure has improved by 0.7 points since 2015.

The new Costa government is attempting a balancing act, undoing some austerity measures while maintaining debt-reduction commitments. Public-sector wage cuts and an income surtax have been reversed, and welfare benefits and the minimum wage have been increased. Indirect taxes have been increased in compensation.

Growth has been moderate, but under forecasted levels. Unemployment rates have fallen steadily but remain high. These declines are due both to economic growth and significant emigration. Despite cuts, taxes on income and consumption remain very high. Tax avoidance remains a problem.

A bank bailout in 2015 inflated that year’s government deficit, but deficits in general are falling to moderate levels. Public debt levels remain very high and growing. With a new funding program ongoing, the research and innovation outlook has improved.

Social Policies

With its social system stressed by crisis, Portugal falls into the lower-middle ranks (rank 25) in the area of social policies. Its score on this measure represents a gain of 0.4 points relative to its 2014 level.

The education sector has been harmed by years of budget cuts. The average number of school years attended is comparatively low. However, PISA results have improved, and a new program will provide free primary-school textbooks. Taxes on pensions and social-benefit cuts have increased the risk of post-transfer poverty. New social-inclusion measures are planned, but have been postponed.

The health care system produces comparatively good outcomes, but has been stressed by spending cuts. Child-support credits have been expanded, and the birth rate has returned to marginal growth following precipitous decline.

The value of several categories of pensions have been increased. The retirement age is now indexed to life expectancy, and is rising slowly. Integration policy is strong. While few refugees have come to Portugal, the government has offered to host more. Crime rates are low.

Environmental Policies

With reasonable outcomes despite policy gaps, Portugal receives middling overall scores (rank 18) with regard to environmental policies. Its score on this measure has declined by 0.1 point relative to its 2014 level.

The government has failed to implement adequate policies on the issues of climate change, protection of water resources, biodiversity and forest conservation. Nevertheless, the decline in economic activity has eased environmental pressure.

The Costa government’s energy policy has been criticized as insufficiently ambitious by observers in the renewable energy sector. However, the country ratified the Paris climate-change accord in late 2016.

A National Strategy for Sustainable Development has long been under discussion, but implementation continues to be postponed. The country largely works through the European Union on international environmental issues, and is particularly active in promoting global protection of marine environments.



Quality of Democracy

With its overall legalistic society, Portugal falls into the upper-middle ranks (rank 17) with regard to its quality of democracy. Its score in this area is unchanged relative to its 2014 level.

Electoral policies are generally fair. Racist and fascist parties are banned. Parties receive public and private funding, with campaign-finance monitoring somewhat weak. Referendums can be held only with elected officeholders’ approval.

A deadlock over regulations mandating that media provide strictly equal air time to all parties was resolved through retraction of the rule. A new public-media oversight council has drawn criticism for a lack of independence, as well as for inactivity. Financial pressures have increased volatility in media-organization ownership.

While civil rights are constitutionally protected, the police and justice systems have been the focus of human-rights-related criticism. Gender and racial discrimination remains moderate concerns, and corruption is a persistent problem. However, courts are independent and strong.



Executive Capacity

With policy flexibility constrained by financial concerns, Portugal receives middling overall scores (rank 23) with regard to executive capacity. Its score on this measure has gained 0.1 point relative to its 2014 level.

The impact of strategic-planning bodies is small. The Prime Minister’s Office (PMO) has limited policy-assessment capabilities, while the Ministry of Finance’s power remains strong. Informal coordination mechanisms are vital particularly within the current minority government.

RIA instruments are rarely utilized, with assessments remaining unsystematic. While the government does consult with some social actors, but the tensions of austerity have made it difficult to generate public support. The governing coalition has shown strong communication coherence.

The Costa government has successfully balanced promises to lift austerity with the need to satisfy EU and financial-market observers regarding debt reduction. Ministers have some incentive to follow the government program, though ministers from coalition parties are inevitably less motivated. Subnational-government administrations have accumulated substantial debt, with many requiring their own bailouts.

Executive Accountability

Burdened by the aftereffects of crisis, Portugal scores relatively poorly in international comparison (rank 34) with regard to executive accountability. Its score on this measure has declined by 0.1 point relative to 2014.

Parliamentarians have few official support resources, through formal oversight powers are generally strong, and the new government has become more responsive to parliamentary requests. The audit office is a judiciary-branch body, as is the ombudsman.

The population’s surge of crisis-driven interest in policy and politics seems to be receding somewhat. Policy knowledge remains uneven, undermined by insufficient government transparency, a weak civil society and an often scandal-focused media. In-depth journalistic policy analysis remains rare.

Political-party decision-making styles range widely. Unions and employers’ associations can formulate relevant policies, but have acted reactively during the crisis. The president conferred with business associations before supporting the formation of the left-leaning Costa government. Non-economic interest associations continue to have little impact despite signs of economic recovery.
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