Portugal and PIGS: Main Lessons of Economic Recovery

... competitiveness. For now, Mariano Rajoy’s government, wary of the opposition and electorate, is sticking to cautious statements avoiding any long-term economic strategy. Prospects As the sovereign financial crisis and lower international ratings barred the PIGS from servicing their state debts, their gradual recovery from this catastrophic decline was only possible thanks to external credit lines provided by the European Union and the IMF. Except for Spain, assistance hinged on sweeping reforms, mostly aimed at consistent budget consolidation through curtailing spending and hiking taxes, which were developed and strictly monitored by the creditors. Along with the liberalized labor ...