Executive Summary

The period under review covers the fourth year in office of the first António Costa government, as well the October 2019 elections and its aftermath, which resulted in the formation of a second Costa government.
Leftist coalition forms unlikely government
The first Costa government entered office in 2015 under inauspicious circumstances. Holding a minority of parliamentary seats, Costa’s social-democratic Socialist Party (PS) needed the support of two unlikely allies – the political forces to the PS’s left: the Left Bloc (Bloco de Esquerda, BE) and the Portuguese Communist Party (Partido Comunista Português, PCP) – to form a government.
Anti-austerity rhetoric raised flags
The anti-austerity and, to some extent, anti-EU discourse of these allies suggested an inevitable clash with the government’s pledge to meet Portugal’s post-bailout European commitments – and market pressures – regarding budgetary consolidation.
Performance far
surpasses expectations
The seemingly precarious nature of this political solution led this arrangement to be dubbed the “geringonça” (or the “contraption”). Yet political practice significantly belied initial expectations. The government lasted a full term. This was an outcome few expected at the outset given the unusual political solution and historical precedent. Out of the previous seven minority governments since democratization in 1974, only one had lasted a full term.
The first Costa government managed to corral a mostly stable parliamentary majority with its left-wing allies, notably in terms of approving the state budget, the key policy instrument for Portuguese governments. In addition, by bringing the hitherto excluded BE and PCP into government decision-making, the “contraption” helped reduce overall political polarization, at least between the PS and the left – if not with right-wing parties.
Consolidation paired with austerity rollback
At the same time, it achieved an unprecedented record of budgetary consolidation, with record-low deficits, while alleviating (in discourse and, at least to some extent, in practice) the austerity agenda that had marked the 2011 – 2014 period.
Success story for post-bailout politics
These results have led to greater international influence for Portugal, as the country has become a success story and a model for post-bailout policies within the European Union. The “geringonça” garnered interest from around Europe as a way of reducing party polarization, very much against international trends. Furthermore, the country’s international recognition was reflected in the election of Minister of Finance Mário Centeno to the presidency of the Eurogroup in December 2017 – an outcome that would hardly have been conceivable without budgetary consolidation.
Growth paired with employment gains
These positive outcomes have been helped by economic growth, boosted by exports and an explosion in tourism. Equally, unemployment rates remain low, standing at 6.6% – the lowest level since September 2002. The country has also become increasingly 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.
Governance capacities show continued gaps
The above elements would suggest an overwhelmingly positive assessment regarding Portugal’s governance. However, while some positive changes in Portugal have been evident during this review period, notably with regard to economic aspects in general and budgetary aspects more specifically, these coexist with persistently low scores in governance dimensions pertaining to policy formulation, implementation and oversight. While there are some improvements, regulatory impact assessment (RIA) framework, strategic decision-making, monitoring of institutional arrangements and policy evaluations remain weak. As in the past, this weak capacity affects the quality and impact of new and existing policies.
Move to improve strategic capacity underway
The silver lining is that there appears to be a recognition of the problem. The first Costa government program had as a key plank the simplification and modernization of public administration, with a focus on improving the quality of governance. Thus, efforts were made to improve governance and strategic capacity (e.g., with steps to institutionalize RIA).
New government
much like the old
In the aftermath of the October 2019 elections, a second Costa executive was formed. For all intents and purposes, this is almost identical to its predecessor. It is again a minority Socialist executive. The ministerial composition remains largely unchanged, with 14 (out of 17) of the previous ministers carrying on and with two new ministries being created: the Ministry of State and Public Administration Modernization, and the Ministry of Territorial Cohesion.
Commitment to modernizing governance
The new government’s program continues much of what it had set out under the previous Costa administration and retains a clear commitment to modernizing governance, reflected in the new Ministry of State and Public Administration Modernization. However, the task of reforming governance is far from easy. Indeed, this is a domain in which previous governments have generally promised more than they have achieved.
No formal deals with
left parties
Moreover, the new Costa government has one significant difference vis-à-vis its previous iteration. This time round, Costa has not secured formal parliamentary deals with the Left Bloc and Communist Party. Another major question for the new government is whether the absence of these deals makes the government’s task easier or more difficult.
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