Executive Summary

Period defined by
The period under review covers the first two years in office of the second António Costa government. The period was inevitably overshadowed by the pandemic. However, it also saw the eventual demise of the Costa government in December 2021.
Allies desert
on budget
The preceding Costa government was able to maintain the support of the political forces to the Socialist Party’s (PS) left – that is, the Left Bloc (Bloco de Esquerda, BE) and the Portuguese Communist Party (Partido Comunista Português, PCP) – to attain power and then to survive throughout a full legislative period, notably in terms of approving the key policy instrument in Portugal, the state budget. However, the government in power during the review period was unable to get either party to abstain on its budget proposal for 2022, which would have been enough for the budget to be approved. As a result, the Portuguese president dissolved parliament in early December, with fresh elections due to take place on 30 January 2022.
End of six-year
governing model
Unsurprisingly, the PS blamed its left-wing partners for the failure to approve the budget, while the latter argued that this failure lay at the feet of the PS. Regardless, this marked the end of the model that had prevailed in the preceding six years: one in which policy sought to gradually wind down austerity measures while simultaneously engaging in budgetary consolidation. It remains to be seen what governing model will emerge after the 2022 elections.
budget surplus
Before the onset of the pandemic, this model delivered the country’s first budget surplus in over 50 years, in 2019. This positive outcome was helped by economic growth, boosted by exports and tourism. Equally, unemployment rates remain low, at around 7%. Moreover, the country has sought to become attractive to the tech sector, with Google and other tech giants opening facilities in Portugal, as exemplified by the country’s ability to host the Web Summit since 2016, with a deal in place to continue hosting the summit until 2028.
Largely positive
record on COVID-19
The response to the pandemic was also largely positive, if not flawless. The country reacted rapidly to the first wave of the pandemic in 2020, avoiding the overutilization of hospitals seen in other southern European countries such as Italy or Spain. Moreover, it has been able to achieve the highest COVID-19 vaccination rates in Europe and is in the top three worldwide, which is a remarkable success. In this largely positive assessment, the one very negative element is the government’s handling of the Christmas 2020 period, when the relaxation of COVID-19 rules led to a massive increase in cases and deaths in early 2021.
Persistent governance weaknesses
The above elements would suggest an overwhelmingly positive assessment regarding Portugal’s governance. However, these coexist with persistently low scores in governance dimensions pertaining to policy formulation, implementation and oversight. It is also important to note that there is recognition of the problem. The second Costa government program has remained committed to improving governance and strategic capacity (e.g., with steps to institutionalize RIA). However, the regulatory impact assessment (RIA) framework, strategic decision-making, monitoring of institutional arrangements and policy evaluations remain comparatively weak. As in the past, this weak capacity affects the quality and impact of new and existing policies.
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