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284 Economic crisis, health systems and health in Europe: country experience
In order to complement existing information, interviews were conducted
and two expert panels were convened (see Appendix 9.1 for details). Experts
included individuals involved in community health, health service management
and provision of care.
1. The nature and magnitude of the financial and
economic crisis
1.1 The origins and immediate effects of the crisis
Portugal already suffered from internal imbalances prior to the current crisis,
with low economic growth, low productivity and low competitiveness. This
situation worsened with the international economic crisis, mainly because of a
shortage of credit, which left Portugal unable to finance its debt obligations. As
in many other European countries, Portugal's public deficit and debt increased
substantially after 2008 following the EU's relaxing of fiscal targets in the context
of the crisis (Table 9.1). The poor macroeconomic outlook for Portugal led to
a deterioration of confidence and rising market pressures on Portuguese debt,
with consecutive downgrading of Portuguese sovereign bonds by credit rating
agencies. The risk premium of 10-year Portuguese treasury bonds began to widen
as the financial crisis deepened, reaching 5.4% in 2010 and exceeding 10% in
2011 (OECD, 2013b). These unsustainable borrowing costs and reduced access
to international debt markets led to a request for international financial assistance
by the Portuguese Government at the beginning of April 2011.
1.2 Government responses to the crisis
In April 2011, Portugal negotiated a bailout with the Troika. The Portuguese
Government and the Troika signed a MoU in May 2011 for a €78 billion loan
(with interest rates averaging 4.3% in 2011 and 3.9% in 2012) conditional
on adoption of the AP, which contained a set of requirements covering the
period 2011–2014. The AP included austerity requirements, such as reducing
public spending and increasing tax revenues in order to reduce the budget
deficit, and focused on fiscal policy, stabilization of the financial sector and
structural reforms in a large number of areas, including labour, goods, services
and housing.
Between mid-2011 and the last trimester of 2012, the AP was implemented
under relatively favourable political and social conditions. There was broad
political support within the government and limited negative reaction to the
austerity programme among the Portuguese population. However, support
for the austerity measures decreased after September 2012. Following the
fifth AP evaluation and preparation of the 2013 state budget, it became clear
that the 2012 austerity measures had not successfully achieved targets, such as