Recent Economic Developments in Portugal

From the Foreword to the first issue: “Among the responsibilities of the International Monetary Fund, as set forth in the Articles of Agreement, is the obligation to fact as a center for the collection and exchange of information on monetary and financial problems,’ and thereby to facilitate ‘the preparation of studies designed to assist members in developing policies which further the purposes of the Fund.’ The publications of the Fund are one way in which this responsibility is discharged. “Through the publication of Staff Papers, the Fund is making available some of the work of members of its staff. The Fund believes that these papers will be found helpful by government officials, by professional economists, and by others concerned with monetary and financial problems. Much of what is now presented is quite provisional. On some international monetary problems, final and definitive views are scarcely to be expected in the near future, and several alternative, or even conflicting, approaches may profitably be explored. The views presented in these papers are not, therefore, to be interpreted as necessarily indicating the position of the Executive Board or of the officials of the Fund.”


From the Foreword to the first issue: “Among the responsibilities of the International Monetary Fund, as set forth in the Articles of Agreement, is the obligation to fact as a center for the collection and exchange of information on monetary and financial problems,’ and thereby to facilitate ‘the preparation of studies designed to assist members in developing policies which further the purposes of the Fund.’ The publications of the Fund are one way in which this responsibility is discharged. “Through the publication of Staff Papers, the Fund is making available some of the work of members of its staff. The Fund believes that these papers will be found helpful by government officials, by professional economists, and by others concerned with monetary and financial problems. Much of what is now presented is quite provisional. On some international monetary problems, final and definitive views are scarcely to be expected in the near future, and several alternative, or even conflicting, approaches may profitably be explored. The views presented in these papers are not, therefore, to be interpreted as necessarily indicating the position of the Executive Board or of the officials of the Fund.”

During the past decade the trend of economic development in Portugal was strongly affected by a change in economic policy and by the disturbances which started in Angola in 1961. In 1959, fiscal policy began to assume an expansionary character as the implementation of the second development plan was started and economic growth began to accelerate after having been modest in the years 1955-58. The events of 1961 changed the emphasis of economic policy, and economic development slowed down in 1962-63. After falling in real terms in 1962, mostly as a consequence of the events in Angola during 1961, private investment recovered strongly in 1963, suggesting that entrepreneurs have found new confidence. There is also a growing interest in direct investment in Portugal among foreign entrepreneurs who are attracted, inter alia, by the relatively low wages, by the export possibilities offered by Portugal’s membership in the European Free Trade Association (EFTA), and by a more favorable official attitude toward foreign investment. In addition, tourism is generating an increasingly important contribution to the national economy.

Portugal’s economic policy and planning in the coming years will have to face structural problems in both agriculture and industry. Not only is the country’s soil fairly poor, but the present pattern of cultivation is far from efficient. Agriculture is further handicapped by the size of landholdings; for the best land use, holdings are too small in the north of the country and too large in the south. Irrigation programs are under way to improve farming conditions, and a start has been made in rationalizing the size of landholdings.

Industrial development suggests a dichotomy between the traditional industries, which have tended to stagnate, and the new industries, which have accounted for virtually all growth in the industrial sector. The marked rise in the production indices of the modern industries in recent years reflects mainly progress in a number of fairly large projects, many of them government sponsored, such as the nation-wide electrification program and the construction of Portugal’s first steel mill. Portugal’s second six-year development plan came to an end in 1964. The Transitional Investment Plan for 1965-67, now being implemented, aims at an average annual growth rate for the gross domestic product (GDP) of 6.1 per cent. The Government intends to launch a new Social and Economic Development Plan covering the period 1968-73.

Supply and Demand

Main developments in 1963-65

Portugal’s gross national product (GNP), which, in real terms, grew on average by more than 7 per cent a year in 1960-62, increased by 5.6 per cent in 1963 (Table 1). In 1964, the rise was 7.3 per cent, i.e., the average increase recorded during 1960-62. Prices rose somewhat faster in 1964 than in 1963 and the increase in money national income in 1964, as calculated by the Portuguese National Institute of Statistics (10.4 per cent), was substantially higher than the increase in real terms

Table 1.

Portugal: Percentage Changes in Supply and Use of Resources, at 1958 Prices, 1960-64

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Source: Portugal, National Institute of Statistics, National Accounts, 1964.

Preliminary estimates.

Including current transactions with the Portuguese overseas territories.

(Table 2). It should be recalled that the national account statistics before 1964 excluded services exchanged between metropolitan Portugal and the overseas territories. For 1964, however, such transactions have been included in the national accounts. The available information on the current account position between metropolitan Portugal and other territories of the escudo area derived from the balance of payments statistics shows a substantial net surplus on services of Esc 1.7 billion in 1964. In other words, the GNP figure for 1964 should be adjusted accordingly to make it comparable with previous years. Taking this adjustment into account and a GNP price deflator of about 3 per cent, GNP in 1964 would have increased by about 5.0 per cent, in real terms, which indicates a deceleration of growth over previous years.

Table 2.

Portugal: Supply and Use of Resources, at Current Prices, 1960-64

(In billions of escudos)

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Source: Portugal, National Institute of Statistics, National Accounts, 1964.

Preliminary estimates.

Including current transactions with the Portuguese overseas territories.

Agricultural output, stagnant for a number of years, declined in 1964 below the already depressed level of the preceding year. Mining output fell slightly. Hence, the expansion in total domestic output in real terms for the year as a whole was contributed almost entirely by the manufacturing, construction, and energy sectors, together with the services industries, particularly tourism.

Private consumption, which in real terms had risen by 11.0 per cent in 1963, went up only 4.5 per cent in 1964. This more moderate rise resulted from lower farm income, as well as higher retail prices and taxes, which partly offset the continuing increase in wages and in remittances received from Portuguese workers abroad. Public consumption, after a sharp rise in 1961-62, slightly declined in 1963 and increased by only 3.3 per cent in 1964. Moreover, total fixed investment in 1964 rose by only 1.1 per cent, a considerably lower rate than the 15.0 per cent increase recorded in 1963. Inventories, which had been run down in 1963, were reconstituted in 1964. Growth of domestic demand, in real terms, the mainstay of the greater output in 1963, slackened in 1964.

The major demand factor sustaining domestic activity in 1964 was an impressive rise in exports of both goods and services. On a national account basis, exports of goods and services increased by about 22 per cent in 1964 (excluding services to overseas territories) in response to brisk demand in other EFTA countries and in the Portuguese overseas territories and to the much larger number of foreign tourists. Net foreign exchange earnings from tourism, of little importance until recently, are now equal to nearly one fifth of the total value of exported goods.

Although total domestic demand lost momentum, imports of goods and services rose more abruptly in 1964 than in the preceding year (17 per cent against 10.7 per cent, again excluding services imports from overseas territories). This development can be attributed partly to the shortfall in the domestic supply of agricultural foodstuffs and fish, but also to much larger purchases of foreign raw materials and machinery by the new and developing Portuguese industries and by those branches of Portuguese industry (for example, textiles) which benefited from the booming export markets for their products.

The absolute amount of the deficit in the external current account of metropolitan Portugal, as shown by the national account data, was reduced in 1964.1 During 1959-63 this deficit averaged Esc 5.2 billion per year, equal to nearly 30 per cent of total imports of goods and services. In 1964 it declined to Esc 3.6 billion, or 12.6 per cent of imported goods and services.1 This basic improvement is especially remarkable in view of the abnormally high level of certain categories of imports. On the other hand, economic policy generally may have restrained rather than stimulated domestic demand and, consequently, also import demand. Furthermore, improvement in the external account rested largely on an exceptionally good performance in the export markets, an achievement unlikely to be soon repeated. Even in late 1964, the rate of increase in exports began slackening and continued doing so in early 1965.

Investment and savings

After the strong recovery in 1963, total fixed investment increased by only 1.1 per cent in 1964. The ratio of fixed investment to GNP at current prices, which was between 18 and 19 per cent in 1963, declined to 16 per cent in 1964. Private sector investment stagnated in 1964, and public sector investment rose by 6.4 per cent.

As shown in the Appendix, Table 17 (p. 344), 1960-64 was marked by erratic movements in both the annual rates of change and the composition of fixed investment. The decline in the growth rate of fixed investment to 1.1 per cent in 1964 was attributable mainly to a reduction in expenditures on infrastructure projects in the energy and transportation sectors and to a lower rate of increase in agricultural investment. The slowing down in agricultural investment is due partly to the high level of total agricultural investment in 1963 occasioned by the start of the irrigation project in the Alentejo region. The financing of this project, which will run over a period of 18 years, will be helped by a loan from the Federal Republic of Germany, equivalent to US$37 million. Industrial investment and housebuilding increased rather strongly in 1964, raising their share in total fixed investment. The proportion of agricultural investment remained at about 8 per cent. The Government’s three-year Transitional Investment Plan for 1965-67 foreshadows continued emphasis on industrial investment; its share in total planned fixed investment would rise to almost 43 per cent, while that of agricultural investment would decline to 8 per cent (see below, p. 324, for further details).2

As indicated by the reduction in the external deficit on goods and services shown in Table 2 and by the reversal from a net debtor position in current account into a net surplus position vis-à-vis the rest of the world (i.e., overseas territories as well as foreign countries, as defined in footnote 3 of Table 18 in the Appendix), the relationship between gross domestic investment and gross domestic savings improved markedly in 1964. In the preceding four years, the savings gap, measured by the excess of gross domestic investment over gross domestic savings, averaged more than 5 per cent of GNP. The rise in the level of private savings in this period was partly offset by the dwindling away of the previously large volume of savings in the public sector, particularly of the central government. Meanwhile the savings on social security funds increased substantially (Appendix, Table 18, and Chart 1). The largest contribution to the sharp increase (47 per cent) in total domestic savings in 1964 was made by the private sector, particularly in the form of corporate savings stemming from the export boom, rising domestic prices, and certain tax facilities.

Chart 1.
Chart 1.

Portugal: Savings of Public Sector1

(In millions of escudos)

Citation: IMF Staff Papers 1966, 002; 10.5089/9781451947236.024.A005

1 As measured by the difference between current payments and current revenues, excluding capital transfers.

The considerably higher level of domestic private savings in 1964 was reflected, to some extent, in a substantial rise of time deposits held with the commercial banks. At the same time, there was a strong demand for bank credit (see below, p. 310), associated broadly with the need to finance the increase in the value of domestic production and foreign trade and with the continued difficulties in attracting investment capital through the domestic issues market or through nonbank financial institutions. These developments, together with the over-all surplus in the balance of payments, led to a further expansion in the liquidity of the economy.

Domestic Production

Mining, manufacturing, and construction, as a group, contribute more to national output than any other sector of the economy (Table 3). In 1964 this group was the source of 44.8 per cent of GDP at factor cost (1958 prices), its share having grown from 38.4 per cent in 1960. Agriculture, forestry, and fishing was next with 20.9 per cent, which contrasted with 25.7 per cent in 1960. The smaller contributions to GDP of other groups have remained relatively static since 1960 despite fluctuations in individual industries.

Table 3.

Portugal: Gross Domestic Product at Factor Cost, by Origin, at 1958 Prices, 1960-64

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Source: Data supplied by the Portugal, National Institute of Statistics and the Organization for Economic Cooperation and Development.

Preliminary questionnaire estimates.


Total production of farm products declined in 1964, owing mainly to generally poor weather (Table 4). For 1964, the index of agricultural production (1947 = 100) was no higher than the average annual index in the 1960-64 period. The fall in agricultural output in 1964 is responsible for the declining share of agriculture, forestry, and fishing in the GDP.

Table 4.

Portugal: Indices of Agricultural Production, 1960-65

(1947 = 100)

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Source: Bank of Portugal, Annual Report, 1964 and 1965.

According to calculations made by the National Institute of Statistics, the 1964 crop was generally smaller than either the average crop of the last ten years or the 1963 crop. The 1964 potato and legume crops were slightly smaller than in 1963, but the cereal crop was 8.1 per cent lower than in 1963. The 1964 wheat crop was 28 per cent below the average of the last decade and 6 per cent below the 1963 crop. Import requirements for wheat in 1964/65 increased to 330,000 tons, compared with 226,000 tons in 1963/64. Total annual wheat consumption averages about 700,000 tons.

Wine production in 1964 was about 4.8 per cent above the 1963 level but 10.9 per cent below the 1962 level, reflecting unfavorable dry weather in August and September and diseases in some vineyards. Olive production fell by 57 per cent from 1963, mainly because unfavorable weather conditions in the south coincided with the normal cyclical low in olive production, prompting the decision of the national oil organization to import 40 million liters of olive oil in 1965. Fruit production in 1964 also dropped below the 1963 level, but the rice crop was considered good. Domestic meat production, measured by the output of slaughterhouses, lagged behind consumption; this lag induced larger meat imports but also sharply higher prices.

Despite the driest spring in 50 years, agricultural crops averaged about 8 per cent higher in 1965 than in 1964. Late rains in September and October 1965 helped to restore vegetable and dairy production. The wheat harvest was estimated to be 21 per cent above 1964 and 13 per cent above the average for the last decade. Production of oats, barley, and rye was also greater than in 1964. However, the corn crop, severely affected by the drought, was estimated to be 35 per cent below the 1964 crop. The rice harvest also fell by about 20 per cent from the 1964 figure, and some fields had to be abandoned during the year because of lack of water for irrigation. The potato crop, particularly hard hit by the drought, dropped by over 30 per cent from 1964. Rainfall in September and October delayed the crops but led to a larger wine production than had been expected. Production will be 8 per cent larger than in 1964 and 34 per cent higher than the average for the last ten years. The olive crop has been estimated at 31 per cent higher than in the 1963/64 crop year (a catastrophic year for olive production).

In line with the Government’s policy of stimulating farm production for market rather than for subsistence, the Corporative Chamber in January 1965 passed a Law of Agricultural Orientation. This law, similar in concept to the French loi d’orientation agricole, will be discussed by the National Assembly. A law providing for consolidation and reparceling of small estates in northern Portugal was passed a few years ago, but so far the results have been meager.

Reparceling plans are designed by a special institution, the Junta da Colonizaãgço Interna,3 which also grants credits for the purchase of machinery or for other investment expenditures necessitated by reparceling. The credit is granted on easy terms: 2 to 4 per cent interest, depending on both the nature of the investment and the economic conditions of the borrower, and amortization in 5 to 20 years according to the type of investment for which the credit is to be used. For the purchase of agricultural machinery, for instance, the period may not exceed 5 years, while for rural construction it may be as long as 20 years. In connection with the Alentejo irrigation project, a decree law was enacted at the end of 1962 enabling the Government to take steps toward the division of large estates.

In September 1963 the Government instructed the Caixa Geral, Portugal’s main lending institution, to modify its lending policy to agriculture by shifting its financing services from traditional products (such as wheat) to more profitable ones (such as fruit and vegetables).4 Later in the year the Government announced new measures (disposicões cerealíferas) revising the regulations for growing wheat, as part of a general policy aimed at reconversion and intensification of agricultural production. Wheat growers will receive considerably reduced financial help (Esc 800 per hectare of wheat and a limit on loans for planting wheat to 75 per cent of the amount borrowed in the 1961/62 or 1962/63 crop year). The incentive given to wheat growers was, in general, to promote mechanization and to divert productive efforts to forage, fruit growing, industrial horticulture, and cattle breeding. At the same time, it was decided to enlarge the margin of differentiation of wheat prices according to quality. However, in view of the unfavorable harvests of 1964, special subsidies, amounting to Esc 300 million, were granted to wheat producers for the next two years. Most of these subsidies were assigned to the building up of infrastructures used as a support to the production, transformation, and commercialization of agricultural goods. By a law of October 1965, a regulation governing cereal production in 1965/66 provides for an increase in the cereal prices of about 4 to 7 per cent. The purpose of this measure is not to stimulate production but to compensate, though only in part, for increased production costs. Wheat prices, in fact, had not been increased since 1948. The law of October 1965 also defined a number of measures, designated as “reconversion of agriculture” measures, to be undertaken in the near future.

Thus far the most successful export products of the primary sector, besides woodpulp, have been tomatoes (of which Portugal is one of the largest suppliers in Europe) and winter vegetables. The numerous varieties of citrus fruit now produced cannot be marketed abroad since they are entirely absorbed by the internal market. However, the efforts being made to encourage the production of fruit and vegetables are expected to make these products an important source of foreign exchange in the future. In April 1965 the Minister of the Economy announced measures to “stimulate in every region of the country the maximum possible increase of agricultural production that would be economically viable” and to control the marketing of such produce. Emphasis is also to be placed on the development of cattle breeding and on animal products, the prices of which will be increased and guaranteed. New processing plants are to receive grants up to 20 per cent of their building and equipment costs.

Ceilings for most agricultural prices are fixed by the Government, which also subsidizes farmers by supporting certain prices. In view of the difficulties encountered by farmers because of poor crops and higher rural wages, maximum sale prices were increased for milk in July 1964 and for veal in November 1964. In January 1965 the wine commission (Junta de Vinho), charged with supporting the prices of wine to the producers and faced with financial problems resulting from the two abundant crops of 1962 and 1963, decided to lower the guaranteed price to wine producers. Removal of certain agricultural price ceilings also was contemplated. In his April 1965 statement, the Minister of the Economy announced that he intended to move away from rigid stability of agricultural prices to “dynamic stability.” To this effect, prices of basic agricultural products would be increased but consumption prices kept down through carefully chosen subsidies.


In 1963, industrial activity recovered from the slump of 1961-62 and gained momentum in the second half of the year, raising the global index of industrial production (excluding construction) for 1963 as a whole by 8.2 per cent (Table 5). Confidence in business prospects rebounded, and manufacturing output received an impetus from relatively large investments which had previously been undertaken in the leading modern sectors of industry, such as the chemical, metalworking, and petroleum industries. Measured by the industrial index (excluding construction), the growth in 1964 was 11.7 per cent; in the first half of 1965 it was 6.6 per cent over the corresponding period in 1964. Mining, manufacturing, and construction rose to 41 per cent of the GDP in 1963 (see Table 3) and according to preliminary estimates to 45 per cent in 1964.

Table 5.

Portugal: Indices of Industrial Production, 1960-64 and January-June 1964-65

(1958 = 100)

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Source: Seasonally adjusted production indices of the Association of Industries.


Excluding construction.

In spite of relatively large gains in manufacturing output in 1964 and the first half of 1965, the upswing apparently began to lose momentum in 1965.

Some slowing down became evident even in mid-1964. A survey made by the Portugal Industry Corporation (Corporação da Indústria) in December 19645 confirmed this development in the second half of 1964, at least in some sectors (refined sugar, processed cattle fodder, beverages, mineral products, lifting equipment, construction, and public works). Activity remained brisk in other sectors (woodpulp, resin products, glass and glass articles, artificial and synthetic silk, paper and pasteboard, agricultural machinery, and nonspecified electrical material). The same survey also foresaw a decrease of activity in some food processing industries and in the production of furniture in the first half of 1965. About 37 per cent of the companies questioned expected to expand production in the near future, while 9 per cent expected to contract. More than 60 per cent of the enterprises covered by the survey were reported to be working below capacity; a number had unused margins of as much as 20 to 25 per cent. Underutilization of plant capacity was particularly high in the investment goods industries and in the intermediary goods industries. On the other hand, 32 per cent of the enterprises, mostly in the textile sector, stated they would be unable to meet an increase in demand with their present capacity.

Reasons for unused capacity in many enterprises varied from sector to sector. As a general rule the December 1964 survey showed that the main bottleneck in industry was insufficient equipment although the shortage of skilled manpower was stressed more than in June 1964. Insufficiency of equipment was particularly felt in the paper, cotton-textile, knitwear, and cement sectors. Great difficulties in obtaining supplies of raw materials were reported by about half of the industrialists polled, particularly in the food and electrical machinery industries. Shortages of skilled manpower were strongly felt in the production of transportation equipment, electrical machinery, and plastics and in mining. In the automobile assembly industry, which is just getting under way, investors have apparently overestimated consumer demand. Because of keen foreign competition, demand was leveling off in some sectors, particularly in coal mining. Finally, since the second quarter of 1964, home markets have become rather sluggish for the products of some sectors (beverages, construction, and metal structure).

Mining and quarrying output was 4.4 per cent lower in 1964 than in 1963 and continued to decline in the first half of 1965 (see Table 5). Prospects in this sector are considered good, however, especially for soft coal, kaolin, lead and zinc, iron ores, pyrites, wolfram, and marble.

Production of metal products was 13.3 per cent higher in 1964 than in 1963 but only 4.8 per cent higher in the first half of 1965 than in the corresponding period of 1964. Steel production in 1964, on the other hand, stagnated at 200,000 tons. Ultimately, the capacity is to be enlarged to 1,000,000 tons. Present domestic requirements for steel total about 500,000 tons. Over-all expansion in the metalworking industries was due in part to fruition of investments in new plants (for example, automobile assembly lines) and the modernization of existing plants. An important project for the modernization of shipyards in Lisbon got under way in 1964; it is planned to spend Esc 800 million on this project. In July 1964 the Portuguese company that will own the shipyard received a loan of US$13.4 million from two banks in the Netherlands. The shipyard, which is primarily intended for the repair of tankers, will permit repair of the world’s largest new units. A survey of tanker traffic indicated that Lisbon was favorably located on the tanker route to the oil-producing countries. Full-scale operation of the facilities will start in 1967.

The output of chemical products and oil in 1964 was only 6.7 per cent higher than in 1963, mainly because of difficulties in the supply of certain raw materials, such as resins and fungicides. In the first half of 1965, it rose 9 per cent above the level of the first half of 1964. Nearly completed oil refineries in Oporto, established inter alia to process crude oil from Angola, will raise Portugal’s refining capacity to 1.5 million tons a year. One of the main projects is the establishment of a lubricating oil plant, in which foreign companies are interested. Since Portugal does not yet have such a plant, this project will result in considerable foreign exchange savings.

Production of textiles, clothing, and footwear advanced 9.4 per cent from 1963 to 1964, but by only 3.9 per cent in the first half of 1965. This industry employs a labor force of 110,000. Development was mainly in the cotton sector, which benefited from modern plant facilities and established external markets; expansion of production is expected to continue at an annual rate of 7-8 per cent during the next decade. Low labor costs and supply of raw material from overseas territories give the cotton industry a relatively strong competitive position. The wool textile industry, however, is less favorably placed; it consists of a number of small enterprises. According to a survey made during 1964, lack of labor6 prevented 20 per cent of the companies surveyed from increasing production; 60 per cent worked at full capacity. As a whole, the textile industry has benefited more than other Portuguese industries from a reduction of customs duties in EFTA. On the other hand, the industry is feeling the effects of the temporary import charge imposed by the U.K. Government; exports of textiles fell from 3,415 tons in the first seven months of 1964 to 1,770 tons in the corresponding period of 1965.7

The output of wood, cork, and furniture increased sharply during 1964 and continued upward in 1965. This industry produces the country’s traditional forestry exports, including woodpulp, particle board, and fiberboard. Portugal’s wood output is based on pine and eucalyptus species, which together occupy most of the forest land. The cork industry employs about 20,000 workers in 700 factories. In spite of the recently increased supply of synthetic materials, world demand for cork has continued to rise. Portugal’s reforestation program has been intensified, and in certain areas forestry is replacing the traditional production of cereals. A special government office has been created for loans and technical and financial assistance to farmers who shift from agriculture to forestry.

Products of the fishing and fish canning industry rank third after cork and textiles in value of exports. This industry, which employs about 100,000 workers, has been greatly handicapped by an antiquated fleet, overfishing of cod in recent years, lack of young labor, increased foreign competition, and a boycott by some African countries which were formerly important export markets. In 1964, however, the volume of catches exceeded that of previous years by 15 per cent. Within the framework of the Transitional Investment Plan for 1965-67, investments of Esc 318 million are scheduled to develop this industry, which at present does not satisfy the country’s needs for cod and other fish.

Production of electricity, though about 11 per cent higher in 1964 than in 1963, declined by about 8 per cent in the first half of 1965 from the corresponding period in 1964 because of drought. Hydroelectric power represents more than 90 per cent of total production of electricity. The Plan for National Electrification was greatly advanced in recent months by the near completion of the joint Spanish-Portuguese Douro power project, financed partly by a loan from the International Bank for Reconstruction and Development (World Bank).8 Thermal electricity production declined by 8 per cent in the first ten months of 1964, but the enlargement of a thermal power plant in Oporto is now under way with the help of a US$5 million loan from the World Bank. In April 1965, the World Bank approved another loan (equivalent to US$15 million) to help construct the first stage of the Carregado thermal power plant near Lisbon; the total cost of this plant is estimated at $25 million.

Tourism expanded enormously in 1964 (see below, p. 338). Government encouragement of tourism includes tax exemptions, development of areas included in the Investment Plan, and construction of hotels and airports. The Government has also welcomed the creation of joint Portuguese-foreign companies to develop tourist facilities and property sites in some places, particularly in the southern part of the Algarve region.

Construction picked up in 1964. It had dropped by about 3 per cent in the first nine months of 1963, largely because of fiscal measures introduced to discourage investments in the construction of uncontrolled rental buildings and because of rising construction costs. During the first nine months of 1964 about 15,000 dwelling units were completed, almost 31 per cent more than in the same period of 1963. Dwelling units completed in the first nine months of 1965 were 7.6 per cent higher than in the corresponding period of 1964. In order to accelerate the construction of low-rent apartments, the Government decided in December 1964 to exempt low-rent apartments from certain real estate taxes (sisa and contribuiçãdo predial) and to reduce some transfer taxes. Activity in public works other than road construction was sluggish. A switch to thermal power projects and delays in implementing other construction projects have caused more underutilization of equipment owned by a number of important contractors who specialized in the building of dams.

According to studies made by the National Institute of Industrial Research, per capita output (adjusted by a price index) rose during 1959-63 at annual rates of 6.5 per cent in the canned fish industry, 0.4 per cent in the flour mills, 3.1 per cent in the cotton textile industry, 6.5 per cent in the cork industry, and 10.9 per cent in the production of electric cables. Other studies made by the planning agency for 1953-62 indicate that the productivity index (measured by the gross internal product per active person employed) increased at annual rates of 9 per cent in the electricity sector, 6 per cent in the manufacturing and building sectors, 4 per cent in the transport and communication sector, and 1.8 per cent in agriculture; on the other hand, it decreased by 2.1 per cent in mining and quarrying.

Prices, Employment, and Wages


Usually, wholesale and retail prices rise in the preharvest months and decline after July. In 1964 and 1965, however, the spring increase was not followed by the normal seasonal decline because of severely reduced cereal, olive, and vegetable crops.

The global index of wholesale prices (1948 = 100) advanced one percentage point from 1963 to 1964 (Table 6), reflecting rises in prices of food (2.7 per cent), raw materials (7.9 per cent), and manufactured goods (0.9 per cent). This rise in wholesale prices was slightly more pronounced for products from overseas territories than for products imported from third countries. In the third quarter of 1965 the global index was 3.3 per cent higher than in the corresponding quarter of 1964, mostly the result of advances in prices of food (7.0 per cent), while the price of manufactured goods increased by only 0.9 per cent. In this period, the advances were more pronounced for domestic than for imported goods; wholesale prices for overseas products increased slightly.

Table 6.

Portugal: Wholesale Price Indices, Annually, 1961-64 and Quarterly, 1963-Third Quarter, 1965

(1948 = 100)

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Source: National Institute of Statistics, Boletim Mensal.

The Lisbon index of consumer prices9 swung sharply upward after mid-1963 (Table 7). In 1964 the global index was, on average, 3.4 per cent higher than in 1963, influenced mainly by a 5.7 per cent rise in food prices. In 1965 the global index rose 3.4 per cent above 1964, chiefly because of the rise in prices for both food (4.1 per cent) and rent (3.3 per cent).

Table 7.

Portugal: Consumer Price Indices, Lisbon, Annually, 1960-64 and Quarterly, 1963-65

(July 1948-June 1949 = 100)

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Source: National Institute of Statistics, Boletim Mensal.

Including also electricty and fuel, health, and miscellaneous services.

Prices of all major agricultural products are controlled at both the producer and the retailer level. In 1964, shortages of some foodstuffs (codfish, olive oil, and meat) induced speculation, and at times actual prices exceeded the prices fixed by the Government. Imports of certain foodstuffs are subsidized by the autonomous Food Supply Fund (Fundo de Abastecimento).10 In 1964 the sources of subsidies of the Food Supply Fund were insufficient to satisfy the total import demand for codfish, olive oil, and meat at the given domestic prices.

Uncontrolled prices, namely those of products consumed by higher income classes, have increased more than the Lisbon consumer price index indicates, owing to higher sales taxes since 1962 and rising production costs, which were passed on to the purchasers at the wholesale and retail levels.

The general price increase prompted the Government to take some measures in 1964 to keep prices down. As mentioned before, the costly cultivation of wheat was to receive reduced subsidies in 1965. The Government ordered massive imports of goods, particularly those in acute short supply; 17 million liters of tax-free olive oil were imported in 1964. As part of the Government efforts to divert consumption from imported to home-produced food (as from meat to fish), the Transitional Investment Plan for 1965-67 provided for accelerated modernization of the fishing fleet. The people were also encouraged to substitute araches (peanut) oil for olive oil.

In September 1964 the Minister of the Economy, though “recognizing that the problem of rising prices was not specific to Portugal alone,” declared that the “Government would not stay indifferent in the face of the inflationary pressures in the economy” and announced some legislative measures extending from a reform of general services to consumer information. He also announced that the Ministerial Council for Economic Affairs would coordinate all the economic measures taken in regard to prices and that the Ministry of Finance would carry out these measures. At the same time the Ministry of the Economy announced that some experimental changes in the price policy and in the distribution channels were being tried out. In March 1965 a new Government agency, the Inspeção Geral das Actividades Econômicas, was created to be in charge of controlling prices and repressing speculation and black markets. The new inspectorate replaced the Intendencia Geral dos Abastecimentos.

Employment and wages

Labor shortages, already serious in 1963, became more acute in 1964, particularly on farms in some regions. In fact, the active labor force continued to decline in 1964. At the same time, underemployment in agriculture remained widespread as a result of insufficient mobility of farmworkers. Seasonal underemployment was also common in the fish canning, cork, textile, and public works sectors. At all levels, lack of skilled labor, particularly middle-level technicians, hampered industrial development in 1964. Nevertheless in some sectors, particularly mining and textiles, there was some unemployment.

The recent labor shortages have resulted from the expansion of modern industries in Portugal, the military draft, and a marked emigration to such countries as France, the Federal Republic of Germany, and Belgium, where wages are notably more attractive than in Portugal. The number of legal emigrants rose from 37,000 in 1963 to 56,000 in 1964; in addition there were some 16,000 clandestine emigrants in both years, and some 11,000 persons migrating to the overseas territories in 1964. Portugal has concluded emigration agreements with France, the Federal Republic of Germany, and the Netherlands and also social security agreements with a number of countries. The Government has taken several steps to provide instruction in managerial skills and to enlarge and improve the facilities for vocational education. In September 1964, the Minister of Corporations announced provision for training, by 1973, about 600,000 specialized workers, 200,000 in technical schools and 400,000 through apprenticeships.

In recent years, lack of skilled workers has intensified competition for labor, as clearly reflected in the more rapid rise in daily wages of mechanized industries. Between 1960 and the third quarter of 1964, daily wages rose by 39 per cent in the electrical machinery industry, 39 per cent in the paper industry, 35 per cent in the cement industry, and 33 per cent in the rubber industry. Wage increases were somewhat smaller in the traditional sectors such as textiles (27 per cent), fish canning (26 per cent), and cork (10 per cent).

The index of Lisbon wages (including manufacturing, transportation, and construction), which had risen by 6.9 per cent on average in 1962 and by 5.1 per cent in the following year, rose by 4.6 per cent in 1964 and by 4.9 per cent between September 1964 and September 1965 (Table 8). The shortage of farm labor was also reflected in sharp wage increases for both men and women.

Table 8.

Portugal: Wage Indices, Annually, 1960-64 and Quarterly, March 1964-September 1965

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Sources: National Institute of Statistics, Boletim Mensal; and Ministry of Finance, Proposta de Lei de Meios, 1965.

Including manufacturing industries, construction, and transportation.

Money and Credit

Monetary policy

The monetary authorities have not pursued an active monetary policy in recent years and did not avail themselves of the traditional instruments of control over the commercial banks.

Monetary policy is the direct responsibility of the Minister of Finance, who delegates certain powers to the Bank of Portugal. Under the banking laws of 1957 and 1959, the following instruments of monetary policy are reserved for the Minister of Finance: (1) altering the liquidity ratio, (2) setting the maximum percentages which certain categories of assets may constitute of the cover for the sight liabilities of the commercial banks, (3) establishing a ratio between capital and reserves and the amount of deposits and other actual liabilities to third persons, and (4) fixing a ratio between capital and reserves, on the one hand, and the amount of liabilities for acceptances, endorsements, and guarantees, on the other.

The most important powers delegated to the Bank of Portugal are rediscounting commercial bills and bank acceptances, making advances to banks and other credit institutions against Treasury bonds, and fixing the discount and rediscount rates. The Bank of Portugal is not in a position to pursue an open market policy. Since the monetary authorities did not, at least until August 1965, use the discount rate to influence the credit policy of the commercial banks, the most important instrument of monetary policy left to the central bank has been its discretion to alter the volume of rediscounts and advances to individual commercial banks.

It does not seem that the Bank of Portugal has attempted to restrain the expansion of bank credit though it has placed a ceiling on advances against collateral of Treasury bonds. In 1964 the Bank of Portugal reduced its rediscounts granted to commercial banks,11 but this reduction was more than offset by the substantial net purchases of gold and foreign exchange which the Bank of Portugal began to make in July 1964 (see below, p. 340), by increased interbank borrowing and by bank borrowing abroad.

Under the terms of Decree-law No. 46492, of August 18, 1965, the following powers have been accorded to the Bank of Portugal: (1) to charge interest at a rate above the normal rate on rediscounts and loans to commercial banks which exceed certain limits; (2) to change, in agreement with the Minister of Finance, the legal liquidity ratios of commercial banks; and (3) to limit, in certain special circumstances, the foreign exchange assets of the commercial banks.

Money supply and liquidity

In 1964, total liquid assets (currency plus demand, time, and savings deposits) in the hands of the public and the public sector rose by 16 per cent compared with increases of 15 per cent in 1963 and 11 per cent in 1962 (Table 9). Provisional figures for the first half of 1965 indicate continued increase but at a less rapid rate. Time deposits more than doubled from the end of 1961 to the end of 1964. Over the same period, demand deposits rose by 51 per cent but currency in circulation by only 18 per cent. As a result, the proportion of currency in total liquid assets dropped to 22 per cent at the end of 1964, compared with 28 per cent at the end of 1961.

Table 9.

Portugal: Monetary Survey, 1960–June 1965

(In billions of escudos)

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Source: Data computed by the Bank of Portugal. The figures for 1960-64 have been adjusted according to National Institute of Statistics, Financial Statistics.


Monetary Fund of the Escudo Area (see below, p. 332).

Including national development promissory notes.

Monetary survey figures do not allow a precise determination of the changes in the claims of the banking system on the public or private sectors: first, no breakdown is available of the bank’s portfolio investments, which are known to consist largely (though not exclusively) of public bonds; and second, the total of unclassified assets and liabilities, as well as changes in these items, are relatively large. In 1964, however, expansion in the volume of liquid assets held by the private and public sectors reflected largely the 15.7 per cent increase in lending to these sectors and the 10.3 per cent increase in the gold and foreign exchange holdings of the banking system. The increase in international reserves, in turn, was due primarily to heavier foreign borrowing by the Government; this borrowing, together with some inflow of private capital, more than offset the reduced deficit in the balance of payments on current account of metropolitan Portugal. In 1963, new lending to the private sector was by far the leading factor in the expansion of liquid assets; creation of money through net purchases of foreign exchange was less important than in 1964. During the first half of 1965, international reserves decreased somewhat, but lending to the private and public sectors went up 4.3 per cent.

The larger budget deficits after 1961 (see below, p. 316) and the recovery of private investment after 1962 greatly stimulated the demand for capital, inducing an influx of funds from abroad and a large expansion of domestic bank credit, which, in turn, reduced bank liquidity. The embryonic state of many capital-market institutions has prevented them from meeting the needs for long-term finance and has strengthened the already solid position of the commercial banks. To some extent, their position has also been enhanced by the crumbling of the private bond market since no change was made in the maximum interest rate of 5 per cent at which bonds could be issued despite the rise in interest rates caused, to a large extent, by the reduction in bank liquidity accompanying the rise in bank credit. As a result, there has been a relatively large increase in the creation of liquid assets. Because of this development and also partly because of the psychological effects of the 1961 events, the traditionally high liquidity of the Portuguese economy as a whole has tended to rise further; the ratio of liquid assets to GNP, which rose from about 79 per cent in 1960 to 81 per cent in 1963, increased to as much as 85 per cent in 1964, compared with 72 per cent in 1955 (Charts 2 and 3).

Chart 2.
Chart 2.

Portugal: Ratios of Total Liquid Assets Held by Public and Public Sector and of Time Deposits of Commercial and Savings Banks at End of Year to G N P

(In per cent)

Citation: IMF Staff Papers 1966, 002; 10.5089/9781451947236.024.A005

Chart 3.
Chart 3.

Portugal: Monetary Liabilities of Central Bank and Total Liquid Assets at End of Year

(In billions of escudos)

Citation: IMF Staff Papers 1966, 002; 10.5089/9781451947236.024.A005

1 In hands of the public and the public sector.2 Including banknotes and sight liabilities of the Bank of Portugal.

Interest rates

In the early 1930’s, after years of inflation, Portugal implemented a stabilization program, together with a policy of low interest rates, which still affects the lending rates of the commercial banks. These rates could not legally exceed by more than 1.5 percentage points the discount rate of the central bank for direct discounts to the public.12 On September 1, 1965, the Bank of Portugal raised its discount rate from 2½ to 3 per cent and its rediscount rate from 2 per cent to 2½ per cent for operations in Lisbon and Oporto. Elsewhere in Portugal the higher rates had been in force since 1948. The effect of these measures was to establish uniform rates throughout the country.

Actual interest rates, determined by market forces, differed substantially from legal rates. Since the early 1960’s, lending rates of the commercial banks had risen under the pressure of demand for credit; as a consequence, the banks have been driven to increase their competition for deposits, using subterfuges to charge more than the legal maximum rate for short-term loans. This situation was clearly recognized by the Director of the Research Department of the Bank of Portugal in a recent article in these words:

… Recently some competition has been noticed between the commercial banks in obtaining time-deposit business; in many cases interest rates of 3% and 4 per cent are being paid. And for certain clients, normally those with big deposits, banks often reduce rates for transfer premiums, charges on collections and other commissions for services rendered, or even do not charge them at all.13

The maximum rate of 5 per cent for bonds, which did not change in 1964 and 1965, prevented an efficient functioning of the bond market as it was more attractive to lend on mortgages at 7-8 per cent, to invest in real estate, and to place money on time deposits.

This situation prompted the Ministry of Finance to promulgate, on August 18, 1965, a number of important monetary regulations. In these regulations, deposits in credit institutions are divided into three groups: (1) demand deposits, (2) time deposits (callable after the period for which they were deposited—a period that, for commercial banks, cannot be less than one month or more than one year), and (3) deposits subject to advance notice before withdrawal (notice required cannot exceed 90 days). The regulations adapt the prescribed minimum liquidity ratio for commercial banks to the newly defined types of deposits. The banks thus have to keep—in the form of cash in vault, balances with the Bank of Portugal, and development promissory notes issued by the Government—a total amount equivalent to at least 15 per cent of their sight liabilities in escudos, plus 10 per cent of the total of their time deposits in escudos and deposits subject to 30-90 days’ notice of withdrawal, plus 5 per cent of the total of their time deposits in escudos callable after more than 90 days. For the purpose of the minimum liquidity requirements, commercial bank deposits in escudos subject to a withdrawal notice of less than 30 days are considered as sight deposits.

Banks and credit institutions will not be permitted to pay interest on different types of deposits in excess of the following limits:

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These institutions may not charge interest in excess of the following limits:

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Under special circumstances, the Minister of Finance, on the recommendation of the Bank of Portugal and after having obtained the opinion of the National Credit Council, can limit by executive order the credit granted by money-creating institutions and nonbank financial intermediaries. The Government also reserves the right to regulate bank credit for the financing of hire-purchase transactions. It may also allow part or full exemption of the capitals tax and of the complementary tax on interest coming from bonds issued by enterprises whose activity is in the interest of the country’s economic development.

Different criteria govern the lending rates of the complex Caixa Geral, which is a public corporation and combines the features of a savings bank and of a bank for the social security system. Rates charged on loans to private enterprises, which are mostly granted for relatively large projects, range between 4 per cent and 4.5 per cent. Loans to the Government bear an interest rate of 4 per cent and loans to the municipalities an interest rate of 4.5 per cent. Rates on loans to farmers usually range between 3.5 per cent and 4 per cent. Mortgage rates charged by the Caixa Geral in the first half of 1964 averaged 4.1 per cent. The Caixa Geral pays no interest on very large deposits and pays more than the commercial banks on deposits of less than Esc 100,000, i.e., on virtually all private savings accounts.

The National Development Bank (Banco de Fomento Nacional) is another supplier of medium-term and long-term credit, but on a much more modest scale than the Caixa Geral. On medium-term loans it charges between 4 per cent and 6 per cent and on long-term loans between 4 per cent and 7 per cent. The level of these lending rates tended to increase somewhat in 1964; it is relatively high compared with those of the Caixa Geral, a fact which reflects mainly the cost of foreign borrowing as a source of finance for the Development Bank, and to a smaller extent, differences in the nature of these projects financed by these two institutions. Rates on time deposits with the Development Bank, which are of negligible importance, range between 3¼ per cent and 4 per cent for deposits up to Esc 2 million, and between 3¼ per cent and 3⅞ per cent for deposits above that amount.

Credit institutions

Commercial banks extend more than 80 per cent of their credits by discounting bills. Medium-term loans granted by the commercial banks in 1963 represented 9 per cent of total loans and 2 per cent of total credit granted (loans and commercial portfolio); these proportions did not change markedly in 1964. The available information is not sufficient to determine accurately the actual volume of medium-term credit (that is, credit for a period between one and five years) since a large part of it is granted in the form of short-term revolving credit. In 1964, however, commercial banks insisted, mostly when credit was granted to small enterprises, on a 10 per cent reduction in the amount of a given credit granted at any time it was renewed. Giving guarantees is an important source of revenue for the banks, largely because contractors who tender bids for public works and those to whom projects have been allotted are obliged to deposit a certain percentage of the cost of the project with a bank. Lacking the necessary cash, they use the guarantees of the banks. Holdings of shares and bonds which are not guaranteed by the State may not exceed the equivalent of total reserves plus one fifth of capital; there are also limitations on the share which banks may take in the capital or the bonds issued by individual enterprises.14 No limits are set to holdings of Treasury paper, i.e., government bonds and promissórias.15

At the end of 1964, outstanding loans of the commercial banks were 23 per cent higher than in December 1963 and 5 per cent higher in June 1965 than in December 1964 (Table 10). This increase continued the recent trend; in 1963, outstanding bank credit rose by 19 per cent and in 1962 by 11 per cent, after having remained stable in 1961. In 1964 the commercial banks increased their portfolio of securities substantially more than in 1963.

Table 10.

Portugal: Main Assets and Liabilities of Commercial Banks, 1960-June 1965

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Sources: National Institute of Statistics, Financial Statistics, and data supplied by the Bank of Portugal.


Medium-term Treasury paper maturing in 1-5 years and bearing interest rates of 1 per cent.

Excluding interbank deposits.

Commercial banks were able to rapidly expand the volume of credit granted partly because of a sharp rise in deposits kept with them. The increase in both sight and time deposits was more marked in 1964 than in 1963. For time deposits, the large rise (25 per cent) was due to a change in the structure of interest rates that came about under the impact of the heavy demand for credit and the failure of the bond market to attract funds because of the ceiling on bond rates. During the first half of 1965, time deposits went up another 17 per cent while sight deposits declined slightly.

The ratio of primary liquidities to total deposits at the end of 1964 was 17.6 per cent, practically the same as a year earlier, but it declined to 14.7 per cent in the first half of 1965. Allowing for the prescribed holdings of liquid assets, excess liquidity in the banks rose somewhat during 1964, despite the sharp increase in lending operations and the reduction in rediscounts with the Bank of Portugal.

The decree-law of August 1965 specifically states that the Bank of Portugal may set limits on foreign exchange reserves of commercial banks. The banks must furnish the Bank of Portugal information on their foreign exchange operations and foreign borrowings.

Saving banks make slightly over one third of the total amount of loans granted by commercial and savings banks. The volume of loans by the savings banks that was outstanding in December 1964 (Esc 12.8 billion) was 8 per cent higher than in December 1963 and 2.7 per cent higher in June 1965 than in December 1964. The rate of increase in 1964 was higher than in the two preceding years. For deposits (totaling Esc 17.2 billion in 1964 and Esc 17.6 billion at the end of June 1965)16 the rate of growth in 1964 was 12 per cent, about twice the rate in 1963. The rate of growth of deposits was 2.5 per cent in the first six months of 1965. Primary liquidities rose from Esc 3.6 billion in 1963 to Esc 4.6 billion in 1964. In contrast to commercial banks, savings banks increased their ratio of primary liquidities to total deposits from 24 per cent at the end of 1963 to 27 per cent at the end of 1964 and to 30 per cent at the end of June 1965. As liquidity rose, the savings banks increased their deposits with the Bank of Portugal and with other banks, adding also to their portfolio of securities and promissórias.

About 90 per cent of the loans made by the savings banks are granted by the Caixa Geral de Depósito, Crédito e Previdencia. The Caixa Geral is the largest financial institution in Portugal, having deposits about one third as large as those held by commercial banks (90 per cent of its deposits are sight deposits); it is also the leading medium- and long-term lending institution. About 40 per cent of its deposits are made compulsorily by various government departments, social security institutions, and corporative institutions which are obliged by law to keep their liquid funds at the Caixa Geral. Other deposits include 1.2 million small savings accounts, averaging Esc 7,000 each. The slow growth of the deposits at the Caixa Geral in recent years until 1964 reflected in part the difficulties of attracting new resources at prevailing rates and the efforts made by commercial banks to attract more deposits, and was until 1964 outstripped by the rate of lending; the ratio of cash to deposits had declined from 35 per cent in 1960 to 26 per cent in 1963 but went up to 30 per cent in 1964. Industrial loans by the Caixa Geral are generally granted for relatively large projects as is evidenced by the fact that in the period 1957-63 only 450 of such loans were made.17 The Caixa Geral is the largest single supplier of mortgage loans in Portugal. Most of the lending by the Caixa Geral takes the form of short-term loans, but, as for commercial banks, this fact offers no sufficient indication of the effective maturities of the loans in view of the importance of revolving short-term loans.

The size of the Caixa Geral and its role as a social security bank largely explain the structure of the asset portfolio of the savings banks. Total outstanding loans and portfolio investment of Esc 14.6 billion at the end of 1964 consisted of claims on the public sector18 amounting to some Esc 5.9 billion (of which Esc 2.8 billion was in government securities); claims on the corporative institutions19 amounting to Esc 1.3 billion; and claims on the private sector amounting to Esc 7.4 billion, including industrial loans of Esc 3.1 billion, agricultural loans of Esc 1.2 billion, and loans for housing of some Esc 1.1 billion.

New credits granted by the Caixa Geral to the private sector amounted to Esc 652 million in 1964, about the same as in 1962 and 1963. Some 1.8 per cent of this amount went to agriculture, 24 per cent to manufacturing industries, 13 per cent to housebuilding, and 5 per cent to transportation.

Other credit institutions include mainly the National Development Bank (Banco de Fomento Nacional), which is an institution for medium-term and long-term credit. However, certain public funds (i.e., those for the merchant marine, fishing industry, and agricultural improvements) also grant medium-term and long-term credit. The Development Bank was founded in 1958 with a capital of Esc 1 billion (in which the metropolitan government participated 61 per cent). The interest it pays on deposits has not been attractive enough, though tax exempt, to draw deposits from the public. Other sources of funds have been a share in the proceeds of the issues of promissoórias and a 3½ per cent loan of Esc 100 million from the Caixa Geral. Its most important source of funds has been borrowing abroad.20 The effective interest rate paid on issues abroad (6-6½ per cent) has obliged the Development Bank to raise its lending rates to 7-7½ per cent. By Decree-law No. 46663, of November 23, 1965, an authorization was granted for the Development Bank to issue 4 per cent tax exempt bonds in the amount of Esc 250 million. The first tranche of this loan, in the amount of Esc 50 million, has already been issued and was largely covered by the public. Lending takes the form of direct medium-term or long-term loans, purchases of bonds and shares of enterprises, underwriting of new bond issues of companies, and prefinancing new investment projects by means of short-term advances.

New lending by the National Development Bank during 1960-64 ranged between Esc 700 million and Esc 1.2 billion per year; on average, 40 per cent of this amount was channeled to the overseas provinces. In this period domestic lending by the Development Bank averaged 4 per cent of gross fixed investment in metropolitan Portugal. More than 75 per cent of direct loans have financed large projects in electrical power and manufacturing, but loans for agricultural projects so far have been of minor importance. Participation by the Development Bank in the equity capital of new enterprises has been limited.

In 1965, new lending amounted to only Esc 481 million, compared with Esc 706 million in 1964, reflecting the limited resources of the Development Bank.

Securities market

Recently, the bond market has been subject to two opposing forces. On the one hand, maintenance of the maximum rate of interest of 5 per cent for bonds, in spite of the general rise in the level of interest rates, has encumbered the issue of private bonds. On the other hand, the increased over-all budget deficit has led to a steady increase in the domestic issues of government paper. The authorized issues rose from Esc 2.1 billion in 1960 to Esc 2.6 billion in 1963 and to Esc 3.0 billion in 1964. This has been made possible because there is a shielded market for government bonds, which are mostly held by public institutions (social security institutions and the Caixa Geral), by insurance companies as part of their technical reserves, and by commercial banks.21 Issues of shares increased from less than Esc 1.0 billion in 1960 to Esc 3.2 billion in 1964. This increase reflected not only the needs for capital of the private sector which could not be met with bond issues, but also reaction to the rise under the 1962-63 tax reform of the over-all tax burden on the yields of nonregistered bonds from 20 per cent to 32 per cent beginning January 1, 1965.

Transactions in securities have never been very important in Portugal. About half of these transactions take place outside the stock exchanges. The sharp increase in the recorded turnover in 1964 and 1965, after the fall recorded in 1962, indicates new confidence in Portugal’s economic prospects. Improvement in the business climate was also reflected in the prices of shares of companies; these prices exceeded slightly in 1965 their 1960 level as their monthly average rose by 17 per cent in 1964 compared with 1963 and by 15.1 per cent in 1965 compared with 1964. The rise was most pronounced for prices of shares in manufacturing and electricity companies; prices of shares in companies operating in the overseas territories also made some recovery.

In order to improve the structure and the functioning of the capital market, a law providing for the establishment of a system of credit and credit insurance for exports was passed on April 27, 1965, and one revising the statutory provision governing foreign capital in Portugal the following day (see below, p. 339). Other measures with the same purpose have been announced in recent months by the Minister of the Economy or in official texts (Law of Means for 1965). They provide more specifically for (1) regulation of medium- and long-term credit operations and services and transactions in the stock exchanges, (2) regulation of the credit function performed by quasi-banking institutions, and of the constitution and functioning of investment funds, (3) revision of the legal limits of certain interest rates as mentioned above, (4) establishment of a “bureau of bank risks,” (5) adaptation to current conditions of the authorized capital of insurance companies and amendment of the amounts at present required for the initial deposits of these companies, and (6) exemptions from, or reductions of, the rate of taxation on interest on private bonds, on profits imputed to partners, and on the purchase of real estate necessary for business operations as well as reduction of, or exemption from, the stamp tax on the issue of shares and bonds and the establishment of corporations. These measures also provide for regulation of hire purchasing and of the establishment of holding companies and finance corporations. Two investment funds are already functioning and the creation of other investment funds is being prepared.

In August 1965 the Minister of Finance was authorized to reduce or cancel the taxes (i.e., the capitals tax and the complementary tax) payable on interest on bonds issued by firms whose operations are included in development plans or benefit the growth of the economy.

Public Finance

In the Portuguese Government budget,22 ordinary revenue comprises all tax revenue and other types of current government income (such as fees, profits from State enterprises, interest and dividends, and repayments of advances); ordinary expenditures comprise all expenditures that can be expected to recur annually as well as certain investments connected with the current business of the Government. Extraordinary expenditures include practically all central government investments under the Development Plans (including such outlays as loans to overseas provinces), certain other investments, and a large part of the defense expenditures, namely, those directly related to the emergency situation in the overseas provinces. Extraordinary revenue includes the special tax for defense and development of the overseas provinces, income from the mint, proceeds from loans, and drawings on cash balances. Owing to the inclusion among revenue of cash balances and of the expected proceeds from borrowing, the budget as published in the Decreto Orçamental (Budget Decree) is always “in balance.” When scheduled borrowing and drawing down of cash balances are not included in the extraordinary revenue, a surplus or deficit is derived as shown in Table 11.

Table 11.

Portugal: Central Government Budget, Actual, 1960-64 and Estimated, 1964-661

(In millions of escudos)

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Sources: Diário do Governo, several issues; Direcção-Geral da Contabilidade Pública, Conta Geral do Estado, 1960-64; and data furnished by the Portuguese authorities.

The figures refer to the so-called general accounts of the central government, including the budgets of some autonomous services and those of some autonomous funds. The budgets of the Caixa Geral, of the Post Office, and of civil hospitals in Lisbon are not included, but the budgets of the ports of Lisbon and Douro are included.

Including amortization of the public debt.

Borrowing and use of cash balances not included.

Obtaining a surplus in the ordinary budget sufficient to cover the military extraordinary expenditures is the cornerstone of Portuguese fiscal policy. In principle, civil consumption and military expenditures should be financed by ordinary revenue, and, to the extent that borrowing is unavoidable, the utilization of loan proceeds should be restricted to finance investment. The ordinary budget has shown substantial surpluses in past years. In terms of the national accounts, the central government has had an average surplus of current receipts over current expenditures of Esc 0.8 billion in the period 1952-60. Since 1961, the heavier burden of military expenditures and the increased efforts to develop the economy have forced the central government to draw heavily on its cash balances, to enlarge its borrowings from other sectors of the economy, and, since 1962, to resort to borrowing abroad for the first time in many years.

The 1964, 1965, and 1966 budgets

The estimated 1964 budget provided for increases of 4.5 per cent in total expenditures and 4.7 per cent in revenue (excluding use of cash balances and borrowing) compared with 1963 estimates, resulting in an estimated over-all budget deficit of Esc 3.6 billion, equivalent to almost 25 per cent of budget expenditures (Table 11). The most striking feature of the estimated 1964 budget was the moderate increase in military expenditures compared with the preceding budget. The total increase in estimated budget expenditures, in money terms, was much lower than in the preceding year. In past years, actual ordinary budget receipts have been underestimated on average by about 20 per cent, while actual ordinary expenditures have remained close to estimates. Consequently, during many years in the past the actual budget position was much stronger than suggested by initial estimates. More recently, however, actual extraordinary expenditures, particularly military expenditures, have exceeded forecasts substantially, leading to a considerable increase in over-all budget deficits in spite of the underestimation of revenue.

The estimated 1965 budget provided for a 13.2 per cent increase in total expenditures, in part reflecting the Government’s intention to budget military expenditures closer to the actual ones (Appendix, Table 19). Only a negligible increase in the actual budget deficit was expected because of a notable rise in revenue from indirect and direct taxes (Appendix, Table 20). The estimated budget deficit was equivalent to 21.7 per cent of total expenditures. Budgetary expenditures for 1966 have been estimated at Esc 17.4 billion, an increase of 4.0 per cent over the 1965 budget; ordinary expenditures are expected to increase by 2.9 per cent to Esc 11.0 billion and extraordinary expenditures by 5.9 per cent to Esc 6.4 billion. The estimate of total budgetary receipts is Esc 14.2 billion, an increase of 8.6 per cent over the 1965 budget as ordinary receipts are expected to increase by 11 per cent and extraordinary receipts to drop slightly. Direct taxes are forecast to increase by 13.5 per cent, representing 33.7 per cent of total ordinary receipts (32.7 per cent in the 1965 budget). Indirect taxes are expected to increase by 6.6 per cent to Esc 4,094 million (31.9 per cent of total ordinary receipts). It is also estimated that the revenue from import and export duties, which was 14.9 per cent of total ordinary receipts in the 1965 budget, will be 12.2 per cent in the 1966 budget, mainly because all export taxes were suppressed from January 1966 and the external tariff of the members of the EFTA will be reduced by an additional 10 per cent.

A comparison of the estimated 1964, 1965, and 1966 budgets with the budget accounts for the three preceding years suggests that the shares in total expenditures of defense and security, investment, and administration have remained fairly stable. Outlays for servicing the public debt and for social and cultural purposes are increasing. Actual developments may show a different pattern although budget estimates have generally been a fair indicator of trends. In the 1966 budget, defense expenditures are estimated to account for 38.7 per cent of total outlays (37.1 per cent in 1965), investments for 24.6 per cent (25.3 per cent in 1965), administration for 9.3 per cent (11.0 per cent in 1965), servicing the public debt for 11.8 per cent (11.2 per cent in 1965), and expenditures for social and cultural purposes for 8.9 per cent (8.7 per cent in 1965). (See Appendix, Table 19.)

Actual budget expenditures were 9.3 per cent higher in 1964 than in 1963. Ordinary expenditures expanded by 8.0 per cent and the servicing of the public debt by 11.1 per cent. Extraordinary expenditures were 11.1 per cent greater, mainly as a result of rises in investments for the overseas provinces included in the Second Development Plan, which ended in 1964. In the same period, budget receipts went up 8.9 per cent. In 1964, as a result of the 1962-63 tax reform, receipts from the industrial tax rose by about 19.3 per cent, those from predial tax (i.e., on landed property) by 25.2 per cent, and those from the professional tax by 60.4 per cent. As a result of an extension of the period granted to the taxpayers to file their complementary tax declarations for 1964, receipts from this tax (see next paragraph) decreased considerably. The small size of the increase in indirect tax receipts (3.9 per cent) was the result of a decline of 2.3 per cent in revenue from import duties, following gradual elimination of customs duties on industrial goods within EFTA, membership of Portugal in GATT, and economic integration of the escudo area.23 Special excise taxes on overseas products (oil products, sugar, and tobacco) were introduced in 1964.


In recent years, Portugal has undertaken a reform of its system of direct taxation. The revision covered most of the “schedular” taxes, i.e., the taxes on particular types of income. The reform has been almost completed by the introduction of a revised surtax on the “schedular” taxes, which became effective on January 1, 1964. The surtax, called “complementary tax,” complements the system of mainly proportional direct “schedular” taxes, as it is levied at graduated rates on the total income of the taxpayers. Thus it corrects, to some degree, the differences in tax liabilities resulting from different direct taxes on different sources of income.

The tax changes followed a common pattern. The most important change was to establish a direct relation between the actual income of the individual taxpayer and his tax liability. Until the reform, taxes were levied on “normal incomes,” i.e., standard incomes assumed by the tax authorities for the different categories of taxpayers. Also, from 1964 onward, improvements were made in the techniques of assessing incomes and collecting taxes. Another innovation is that all types of income are now being taxed, except for a few exemptions granted for social, economic, or technical reasons. As a counterpart to the discontinuation of most exemptions granted indiscriminately to all taxpayers, the number of exemptions to be granted to the individual taxpayer on account of his personal economic situation was enlarged. Moreover, the rates of the “schedular” taxes were generally reduced, the only exceptions being the tax on the rental value of urban property, the higher brackets of the tax on labor income, and the inheritance and gift taxes, the latter having been already reviewed in 1958. The latter rates were increased or remained at their earlier level.

Lowering the rates was prompted by the assessments of taxable capacity achieving greater realism. The preamble to the revised Complementary Tax Code explained that, since in the past taxable capacity was often underestimated, the old rates would prove to be too high for the taxpayers and detrimental to the economy. The preamble to the revised Tax Code on Transfers, Gifts, and Inheritances stated that the Portuguese inheritance duties were low compared with those in other countries.

The tax reform also aimed at mobilizing domestic resources for investment. To that effect, tax incentives were granted for certain transactions such as the reinvestment of undistributed profits, the merger of certain types of enterprises, and investment by private persons in enterprises considered of regional interest.

The “schedular” taxes have remained proportional, with the exception of the tax on labor income (professional tax), which has become slightly progressive. The complementary tax on profits of corporations, which was proportional, has become moderately progressive.

In August 1965, three decree laws provided for abolition of all export duties from January 1, 1966, simplification of collections, and suspension of the tax on farming profits, which had been imposed in 1963.

Some additional revenue can be expected in future budgets from the following measures: (1) revision of the special fiscal regime for several industries, including matches, tobacco, beer, and transportation, and (2) implementation of a turnover tax, which will be coordinated with a reform of stamp duties. The authority to introduce a turnover tax was provided in the Law of Means for 1965. The percentage rate, not yet determined, would be low in order to avoid an unduly severe reduction of purchases. The turnover tax would not apply to purchases of essential goods such as food, raw materials, equipment goods, and medicines, nor to export transactions.

An increase in taxes in the early 1960’s, prompted by the rise in budget expenditures, was accompanied by changes in the tax structure. These changes led to a reduction in the share of direct taxes in total tax revenue24 from 42 per cent in 1960 to an average of 40 per cent in the period 1961-64 (see Appendix, Table 20). As a result of the most recent tax reform, the share of direct taxes in tax revenue was expected to rise to 44.8 per cent in 1965 and to 46.2 per cent in 1966.

Financing the budget deficit

Foreign borrowing used to cover the budget deficit amounted to almost 44 per cent of total borrowing in 1964. The estimated 1965 and 1966 budgets, however, rely less on foreign credit (Esc 1.4 billion in 1965 and Esc 1.1 billion in 1966, against Esc 1.7 billion in 1964) and more on domestic credit (Esc 2.3 billion in 1965 and Esc 2.1 billion in 1966, against Esc 1.7 billion in 1964). This change will reduce foreign borrowing to 33 per cent of the whole borrowing in 1965 and 1966.

As explained above (p. 314), the Government enjoys a sheltered domestic market for its bond issues. Recent extension of the social security system to additional sections of the population added between Esc 500 million and Esc 750 million annually to the sums available for subscription to special Treasury certificates. In 1964 the social security system subscribed to Esc 500 million worth of special Treasury certificates. Private insurance companies have taken up 3.5 per cent government bonds as they are required to hold part of their reserves in the form of Treasury paper.25 Purchases of Treasury paper amounted to Esc 744 million in 1962; later figures are not available. The total volume of promissoórias,26 for which the Bank of Portugal has assumed a repurchase commitment, may not at present exceed Esc 3.5 billion. The total of promissoórias outstanding at the end of 1964 was Esc 2.6 billion; savings banks held 52 per cent, commercial banks 35 per cent, and the Bank of Portugal 13 per cent. Issues of promissoórias amounted to Esc 500 million in 1964, the same as in 1963 but twice as much as in 1962.27 In 1964, as in previous years, the Treasury did not draw on its credit lines with the Bank of Portugal.28

In 1964, the Government’s drawing in dollars on loans received totaled US$51.3 million, equivalent to nearly Esc 1.5 billion. (For further details of foreign borrowing transactions in recent years, see below, p. 340.)

The public debt rose from the equivalent of about 25 per cent of GNP at market prices in 1960 to more than 30 per cent in 1964 (Appendix, Table 21). At the end of 1964, some 40 per cent of the public debt was consolidated debt. The external debt increased from 3 per cent of total debt in 1961 to 22.5 per cent in 1964.

Development Planning

The two six-year development plans carried out so far have had a limited scope in the sense that they were primarily investment plans, and as such covered—both in the private sector and in the public sector—only part of total investments; on the other hand, the planned investments did affect most sectors of the economy. The projects included in the second plan covered roughly one third of total investments. Both plans have been binding on the public sector and indicative for the private sector. New projects that were initiated during the planning period were not necessarily included in the Second Development Plan, 1959-64.29 The Transitional Investment Plan for 1965-67 followed.

Second Development Plan, 1959-64

Actual investment expenditures in metropolitan Portugal under the second six-year Development Plan, after declining slightly in 1962, increased by 14 per cent in 1963 and by 10 per cent in 1964. Total investment under the Plan, originally estimated at Esc 22 billion (Appendix, Table 22) at 1958 prices, amounted to Esc 27.1 billion at current prices. The increase in planned investments in the last year of the second plan has been determined mainly by the oil and manufacturing industries, mining, and transport (Tagus River bridge and airports).

Even taking into account the rise in prices since 1959, total actual investment included in the six years of the second plan has exceeded the forecasts. Investments have lagged behind the goals, however, in some sectors, namely, agriculture, mining, research, and training. Some investments had to be somewhat delayed because of a lack of financial resources (especially after 1961, when it became increasingly difficult for most companies to resort to the capital market) and because of higher costs due to increased prices of imported goods and increased domestic labor and credit costs. It became possible, however, to complete all the main projects included in the plan.

Transitional Investment Plan, 1965-67

The three-year Transitional Investment Plan, begun in 1965, is intended to be both transitional for the two six-year plans and preparatory for the third Development Plan to follow in 1968. The transitional character, as stated in the Plan, is due to the fact that “certain trends of particular importance of Portugal’s long-term economic development are very difficult to foresee over a longer period, namely, the economic integration in Europe, the problems of integration within the escudo area, and future developments in defense expenditures.” The main objectives of the Transitional Plan are to accelerate the growth rate of the national product and to distribute national income more equitably: these objectives must be reached, while maintaining the internal and external monetary equilibrium of the country and the equilibrium of the labor market, without neglecting all possible coordination with national defense. For these purposes, priority will be given to the creation of new industries that can be expected to increase exports or produce substitutes for imports, to investments in projects that will yield quick results (manufacturing and tourism),30 and to public investment that will most directly improve labor productivity. The Transitional Plan envisages continued efforts to give the economy a more dynamic structure; it is larger in scope than the previous plans, since it includes, besides the particular investments of higher priority, global trends of evolution which have been projected for the main economic sectors.

The total volume of fixed investment included in this Plan has been estimated at Esc 34.8 billion at 1958 prices for metropolitan Portugal. Total gross investment in 1965-67 at current prices has been estimated at Esc 61.3 billion.

According to the annual Implementation Program for 1965, the Transitional Plan investments to be realized in 1965 are valued at a total of Esc 11.4 billion, or one third of the total planned for 1965-67. Distribution of these investments is shown in the Appendix, Table 22.

For the economy as a whole the Government expects the contribution to GDP from primary sector production, which was 26 per cent in 1962, to decline to 19 per cent in 1967 and to 15 per cent in 1973, while the contribution from the secondary sector would rise from 37 per cent in 1962 to 45 per cent in 1967 and to 51 per cent in 1973. Employment in agriculture is expected to decline annually by 2 per cent in 1965-67 and by 4.5 per cent in 1968-73 (Table 12). Employment in the manufacturing industries, on the other hand, should increase annually by 2.5 per cent in 1965-67 and 3.0 per cent in 1968-73, and health and education services by 5.5 per cent and 6.0 per cent, respectively.

Table 12.

Portugal: Targets of the Investment Plan, 1965-67, and the Third Development Plan, 1968-73

(In annual percentage increases)

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Source: Presidency of the Council of Ministers, Transitional Investment Plan, 1965-1967.

The increase in productivity in the agricultural sector will reflect the expected decrease in the underemployed labor force in this sector rather than real gains in productivity itself.

The general forecast for 1965-67 is an annual increase in GDP at constant prices of 6.1 per cent (Table 13), resulting from annual growth rates of 1.2 per cent in agriculture, 9.5 per cent in manufacturing industries, 11.5 per cent in electricity, 8.1 per cent in construction, and 6.5 per cent in mining. The largest gains in productivity per man-year during this period are expected to occur in the electricity sector, manufacturing industries, mining industries, and the construction sector. Productivity per man-year in agriculture will increase more slowly.

Table 13.

Portugal: Average Annual Percentage Increases in Supply and Demand at Constant Prices, Actual, 1953-62 and Planned, 1965-73

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Source: Presidency of the Council of Ministers, Transitional Investment Plan, 1965-1967.


Private consumption in 1965-67, it is estimated, will increase at a slower rate than GDP, that is, by 5.2 per cent a year; public consumption should rise at a slightly faster rate than GDP, by 6.4 per cent a year. Fixed investment, which should rise by 8.1 per cent a year, will represent 19.2 per cent of GDP at factor cost in 1967 against 18.7 per cent in 1962.

Distribution of planned investment31 under the Transitional Investment Plan for metropolitan Portugal (shown in the Appendix, Table 22) represents about 63 per cent of total gross fixed capital formation forecast. About 43 per cent of the Plan total of Esc 34.8 billion goes to industry, 18 per cent to transportation and communications, 16 per cent to power, and only 8 per cent to agriculture.32 For the overseas territories, the planned investment for 1965-67 amounts to Esc 14.4 billion; about 29 per cent is allotted to transportation and communications, 25 per cent to industry, and 11 per cent to agriculture and forestry (Appendix, Table 23). Exports of goods and services are expected to increase annually by 8.3 per cent and imports of goods and services by 6.5 per cent.

Forecasts for 1968-73

The Transitional Plan also includes development rates envisaged under the third Development Plan (1968-73). In this period, GDP at market prices is expected to increase by 6.5 per cent per annum (see Table 13). The growth rates forecast for the main sectors in that period are 10.5 per cent for electricity, 9.0 per cent for manufacturing industries, 8.5 per cent for construction, 6.5 per cent for extractive industries, and 1.5 per cent for agriculture (see Table 12). Gross fixed asset formation is planned at the rate of 9.2 per cent a year, reflecting growth in the fixed assets of manufacturing industries (11.3 per cent), electricity (9.6 per cent), and agriculture (8.6 per cent). Private consumption is expected to grow at 5.2 per cent and public consumption at 6.5 per cent.

Financial measures suggested in the Transitional Plan

With a view to improving the process of channeling savings into the financing of investments, particularly to the most dynamic sectors of the economy, the Transitional Plan proposed the implementation of certain measures to improve the functioning of the capital market as well as some fiscal incentives.

For the capital market, the Plan proposed to (1) limit interest rates on time deposits (as seen above, this measure has already been implemented), (2) limit government access to the capital market, (3) adjust rates in the money market, (4) adjust some interest rates of the capital market, and (5) revise the statutes and obligations of insurance companies.

Fiscal incentives were envisaged for enterprises in textiles, metal-working, chemicals, and processing of agricultural products—excluding cooperatives. The suggested measures include an accelerated period of depreciation for investments undertaken in accordance with the Plan and a temporary exemption from, or reduction of, the rate of the industrial tax of 15 per cent, as well as reduction of, or exemption from, the capitals tax on distributed profits and on interest coming from bonds issued by these industries; the sisa, or tax on the purchase of land or buildings for such industries; and the stamp tax on transactions related to the issues of securities in such sectors.

Revisions of fiscal incentives in the hotel industry are also suggested. Finally, reductions of, or exemptions from, the contribuição predial, the complementary tax, and the sisa are envisaged for other enterprises, including forestry, horticulture, fruit growing, and meat production.

External Position

Balance of payments of the escudo area

The over-all balance of payments of the escudo area—metropolitan Portugal plus the overseas territories vis-à-vis third countries—which had shown a relatively large deficit in 1961, reverted to surpluses in the ensuing years 1962-64. These surpluses averaged about Esc 3.0 billion (US$103 million) per year.

Balance of payments data for 1964 (Table 14) indicate that, compared with 1963, the foreign trade of both the metropole and the overseas territories with third countries increased impressively. Exports (f.o.b.) of the escudo area as a whole rose in value by nearly 28 per cent to Esc 18.3 billion and imports by about 24 per cent to Esc 23.5 billion, the trade deficit amounting to Esc 4.6 billion in 1963 and to Esc 5.2 billion in 1964. The services account of the metropole improved, showing a surplus of nearly Esc 0.7 billion, mainly as a result of rising net earnings from tourism. In addition, net private inward transfers continued to advance on account of emigrants’ remittances and earnings transferred by Portuguese workers abroad. Net current invisibles received by the overseas territories improved by nearly Esc 1 billion. The current account surplus of the overseas territories again largely offset the traditional current account deficit of the metropole. On balance, the current account of the escudo area as a whole (including private transfer payments) showed a surplus of Esc 0.5 billion, in contrast with the usual deficit in previous years. In 1963 the deficit amounted to Esc 0.6 billion. In other words, the heavy rise in imports during 1964 was more than offset by the rapid growth of foreign exchange earnings from the escudo area’s exports, tourism, receipts, and inward private transfers (Chart 4).

Table 14.

Portugal (Escudo Area): International Transactions, 1960-641

(In millions of escudos)

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Sources: International Monetary Fund, Balance of Payments Yearbook; and data reported by the Bank of Portugal.

No sign indicates credit; minus sign indicates debit.

Revised estimates.

Chart 4.
Chart 4.

Portugal: Current Account Position1 of the Escudo Area

(In billions of escudos)

Citation: IMF Staff Papers 1966, 002; 10.5089/9781451947236.024.A005

1 Goods, services, and private transfers.

The net inflow of private capital declined in 1964 to a rather low level compared with previous years (Table 14), but substantial drawings by the Portuguese Government on foreign loans made the capital account of the escudo area as a whole again show a substantial influx during 1964. Reserves thus continued to rise.

Reserves of the escudo area

After a gradual, almost continuous rise in 1949-59, the gold and foreign exchange reserves of the Bank of Portugal reversed direction, dropping to US$692 million at the end of December 1961 (Chart 5 and Table 15). Thereafter, these reserves (including the IMF gold tranche position) again swung upward; at the end of 1964 they had reached $954 million and at the end of 1965 an all-time high level of $1,009 million.

Chart 5.
Chart 5.

Portugal: Gold Holdings and Net Foreign Exchange Assets of Banks

(In millions of U.S. dollars)

Citation: IMF Staff Papers 1966, 002; 10.5089/9781451947236.024.A005

Table 15.

Portugal: Gold and Foreign Exchange Holdings of the Banking System,1 End of Year 1960-65

(In millions of U.S. dollars)

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Source: Data supplied by the Bank of Portugal.

Including IMF position.