ABSTRACT
Portugal seems to have made good use of its membership of the European Economic Community-now European Union. In fact, at entry (in the mid-1980s), Portugal had the lowest per capita income in the Community, representing only 53% of the EEC average. The inflation rate was in the twenties, the budget deficit was above 10% of GDP and the public debt was around 69% of GDP. There were no long-term interest rates (due to the high-inflation history) and short-term rates were above 20%. The exchange rate was subject to a crawling peg system, in place for almost a decade. The banking sector was almost completely nationalised and most of the basic economic sectors were also subject to strong intervention from the state.
