The European Commission has pointed out that after exiting its bailout program in May, Portugal must continue to implement reforms to improve its economic potential and transition to a sustainable, export-led growth model.
This recommendation is based on the latest assessment of Portugal's performance under the international bailout program.
The European Commission stated that "the program remains on track." It noted that "if reform momentum and fiscal adjustment are maintained after the exit," Portugal's debt-to-GDP ratio, while high, should be "manageable."
The Portuguese economy returned to growth in the second quarter of last year, and 2014 is expected to be the first year of growth since the crisis began.
The European Commission stated that continued reform is necessary to ensure further growth.
The European Commission stated, "The Portuguese government has implemented a series of challenging structural reforms. Although there have been initial improvements, the impact of these reforms on economic performance will only be realized gradually."
The European Commission stated, "Effective implementation of these reforms is crucial for rebalancing the economy and increasing growth potential. Progress in implementation must be continuously assessed, including for projects already completed under the bailout program."
Under the bailout program, Portugal has carried out numerous reforms covering the labor market, the legal system, and cuts to public sector pensions and wages, as well as reductions in the number of public sector employees.
The Commission stated, "Public sector employment needs further streamlining, and job assignments and compensation should be strictly based on performance evaluations."
