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Portugal ROLE OF THE CONSOLIDATED PUBLIC SECTOR
After the revolution, the Portuguese economy
experienced a
rapid, and often uncontrollable, expansion of public
expenditures--both in the general government and in public
enterprises. The lag in public sector receipts resulted in
large
public enterprise and general government deficits. In 1982
the
borrowing requirement of the consolidated public sector
reached
24 percent of GDP, its peak level; it was subsequently
reduced to
9 percent of GDP in 1990.
To rein in domestic demand growth, the Portuguese
government
was obliged to pursue IMF-monitored stabilization programs
in
1977-78 and 1983-85. The large negative savings of the
public
sector (including the state-owned enterprises) became a
structural feature of Portugal's political economy after
the
revolution. Other official impediments to rapid economic
growth
after 1974 included all-pervasive price regulation, as
well as
heavy-handed intervention in factor markets and the
distribution
of income.
In 1989 Prime Minister Aníbal Cavaco Silva succeeded in
mobilizing the required two-thirds vote in the National
Assembly
to amend the constitution, thereby permitting the
denationalization of the state-owned banks and other
public
enterprises. Privatization, economic deregulation, and tax
reform
became the salient concerns of public policy as Portugal
prepared
itself for the challenges and opportunities of membership
in the
EC's single market in the 1990s.
Data as of January 1993
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