Portugal’s fiscal policy has failed to durably reduce the deficit below the Stability and Growth Pact threshold of 3% of GDP and was submitted to the excessive deficit procedure of the EU Commission for a second time in 2005. The paper describes fiscal developments in Portugal over the past...

Faced with the impossibility of reaching a political agreement to review the fiscal treaties, the Commission could limit itself to applying the current rules with flexibility, which would maintain an ambiguous situation: much ado about nothing.