Despite the difficulties, Portugal remains attractive

"The Portuguese, Europe and entrepreneurs need to know that we have a solid financial system that we can trust for our economies and to guide investment in the country".

Reassurance, and more reassurance, is the aim of Socialist Prime Minister Antonio Costa, following the political upheavals the country has experienced since the legislative elections of October 2015. These saw the outgoing right-wing coalition come out on top, only to be ousted from power by an unprecedented alliance between the Socialist Party and radical left-wing formations.

On March 16, Antonio Costa obtained Parliament's final approval of the budget, which he believes will enable him to tackle Portugal's "structural bottlenecks". Brussels remains suspicious, however, and has asked him to make a further 1 billion euros in savings. Lisbon refuses to do so, considering that its project is sound and that the first months of the year have produced a budget surplus.

Lisbon returns to investment

In the meantime, Lisbon is gradually returning to foreign investment. "Investors are looking to us again: we have exited the international rescue plan on schedule, we have embarked on fundamental reforms to rebalance the accounts, and we have become more competitive." explains Miguel Frasquilho, head of the Government Development Agency.

The Chinese are beginning to make their presence felt, taking advantage of the wave of privatizations called for by the EU/IMF bailout program. In particular, they have acquired 23.1 % of the capital of EDP-Electricité de Portugal, 85 % of the insurer Fidelidade, and the electricity distribution network REN.

France wants to continue investing.

They are also by far the biggest beneficiaries of the 2,853 or so "golden visas", which since 2013 have granted residence permits in Portugal - and thereby free access to the market in the 26 countries of the Schengen area - to non-EU foreigners, provided they buy a property worth at least €500,000 and keep it for five years.

France is "the other France is a major investor in Portugal's privatization program, with Vinci involved in airports, and Altice, which has acquired the telephone operator Portugal Telecom. Now Portugal's second-largest customer and third-largest supplier, France is keen to continue investing in the country.

"The training, professional competence and linguistic skills of the Portuguese are real assets in attracting investors. It's reassuring to know that we can count on a serious management team". points out Benoît Gaillochet, Managing Director of Ardian, an investment company, which has just acquired 50 % of Ascendi, concession holder for five freeways in the north of the country, for 300 million euros.

Analysts are cautious. "Current fiscal policy could lead to an increase in the tax burden to cover deficits in the event of slippage, points out economist Nuno Garoupa, who runs a research institute. This could thwart the drive to simplify bureaucracy, another barrier to investment.

Another observation: Portugal is fashionable, attracting investment in real estate and tourism - hence the fear of a speculative "bubble". In 2015, the trade balance in this sector generated a surplus of 3 billion euros: a godsend for a country in crisis.

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