Several posts below have wondered whether Portugal has an economic or political problem. I believe it has both. I shall illustrate with the topic of public finances.
When we look at the history of public finances after the revolution (1974) four main facts emerge. Firts, Portugal never had a superavit in 36 years of democracy. Second, the only time it reduced the weight of public expenditure in GDP (without off-budget measures) was after the second IMF intervention (1983-84).
Third, the growth of public debt has been curved down only through privatization of a huge amount of public assets nationalized after the revolution (a pattern followed with and without the IMF). Fourth, there is a strong evidence of political business cycles over the last 20 years in all legislative elections (1991, 1995, 2002, 2005, 2009) except one (1999).
Now, do we have an economic or a political problem? As we all know a deficit of 3% would not be a problem with a nominal growth rate of 5%, because it woul stabilize the debt to GDP ratio at 60%. The problem is that we did not have that growth rate in the last decade and will not have it in the next decade. So, we have an economic problem.
However, we also have a political problem. As I see it Portugal (and peripheral mediterranean countries) has the instituional disease Mancur Olson identified almost 3 decades ago in The Rise and Decline of Nations: institutional sclerosis. And only a strong government with wisdom, and a majority support in parliament can tackle it. It is a necessary (but not sufficient) condition...
We also have political problems!
(for my articles in Portuguese see Publico http://jornal.publico.pt/noticia/22-01-2011/execucao-do-oe-2011-bussiness-as-usual-21079652.htm and for earlier writings http://www.iseg.utl.pt/~ppereira/finpub)