CEP Default Index Country Report Portugal – 1st half of 2011
The erosion of Portugal’s creditworthiness continued in the first half of 2011. Particularly problematic is the fact that the capital stock shrunk during that period. This means that Portugal remains insolvent. The reform measures taken by the Portuguese government have not generated any positive impact yet.
Reform Prospects
Currently it seems very unlikely that Portugal will succeed in restoring its creditworthiness by mid-2014 as stipulated under the adjustment programme. Particularly unlikely is it that Portugal will restore its competitiveness due to the short period. In order to regain its creditworthiness, Portugal must reinforce the existing reform efforts significantly. This will, however, take many years and be accompanied by a substantial loss of prosperity.
