Why is the fall of the Government good news for Portugal

The Portuguese Government presented its resignation yesterday, after its latest austerity plan had been rejected at the Parliament. Still, what appears to be negative news for Portugal (we really need more cost contention, and that is being demanded by the economical and monetary union we are part of), may actually be a good thing. A few reasons for that:

- the latest Government has been reacting to the way events and news on the Portuguese economy play. But it has not showed any sign of political and economical foresight or political will and skills to implement proactive measures. As a result, medium-term impact measures, that could be producing results now and were clearly necessary to have been decided a year ago, were never done. Portugal's response to the crisis as so, as been slow and not efficient enough;

- Portugal's economy is riff on inefficiencies, steaming from very rigid Labor market laws and too-big-the-country and corrupt public institutions and sector. The measures to counter-attack the escalating debt issue have never even come close to this subjects. Still, they are at the heart of the Portuguese debt crisis;

- A clear example is the incredible number of public institutions, many of them with overlapped responsibilities or no clear mission. A plan was not put in place to tackle this waste of public money, steaming suspections of corruption throughout Portuguese society;

- Portugal should have asked for an intervention from IMF and Eurozone rescue funds. Actually, it should have done so a few months ago. Public debt last issues implied an interest rate far above 7% - an interest that Portuguese long crippled low growth economy cannot sustain. Still, political game stepped in here, playing against nacional economy;

- Then, one of the most important roots of Portugal's problem (maybe even the most important) is the absence of economic growth. GDP has seen a laggard performance over the last 10 years, with successive recessions or almost 0% annual growth rates. That steems from the fact that Portugal has not a country economic strategy, that focus on understanding the country's sustainable long-term advantages, and then delivering a solid country valid proposition and a strategy to enable it. This is critical, and should be at the backbone of any political or economical debate in Portugal;

- And last but not least, a political reason. After 6 years in command, several economic recessions, lots of debates, several corruption accusations, the (now departing) Government didn't have the political capital to really introduce any change - it has run out of energy and public good-will.

The point is now what political force will replace this Government. And, much more important, how will it tackle the most prement Portuguese economic issues - some of them are stated above. Present a good, solid plan for them, and you will have my vote.

http://edition.cnn.com/2011/WORLD/europe/03/23/portugal.austerity/index.html?hpt=T2#