In mid-April, Portugal’s parliament ratified the new European pact on budgetary discipline, the second EU country to do so after Greece. The pact provides for an automatic procedure to punitively sanction a country that swerves away from the rules: a structural deficit of 0.5 percent, a maximum public deficit of 3 percent and a national debt ceiling of 60 percent of GDP.
Ratification was the order of the day for the vast majority of parliament members, as Portugal is under close surveillance by the institutional creditor troika of the European Commission, International Monetary Fund and European Central Bank.
Since May last year Portugal has received international loans worth 78 billion euros, spread over three years, in return for which Lisbon committed to more than halving its deficit to 4.2 percent in one year.
And yet the scale of the public debt kept increasing. It is projected to reach 115 percent by the end of this year.
Sweeping austerity measures in response to the euro debt crisis have further drawn the economy into recession and blew unemployment up to 15 percent in February.
Earlier this month the IMF’s mission chief in Portugal warned that the country might have to back away from deficit targets if economic conditions get worse.
Fernanda Zera, with a degree in administration, is a secretary without a job who has been living on a social allowance of 400 euros per month for two years.
She does some work for an association named Aid and Friendship, in exchange for food.
Zera said: “The middle class is disappearing. I used to be a part of the middle class, and I don’t know what class I belong to now. I do what I can to survive.”
Disillusioned by the unfulfilled promise of city life and feeling stifled by the impact of austerity on economic opportunity, some Portuguese are returning to the land, some of them the grandchildren of many who became urban dwellers in the 1960s.
Young farmer José Diogo explained his decision: “In Lisbon it was hard to find work or get a job, so I seized this opportunity here. The living standard and conditions are better. The outlook on life here hasn’t changed. That’s why I moved inland and began my farming venture.”
Half of Portugal’s more than 10.5 million people live on just five percent of its land area, giving rise to initiatives such as one known as the New Settlers project.