Austerity has been imposed on Portugal in order to lower its debt to GDP ratio. Cuts in government spending have lowered its debt burden but the debt to GDP ratio has increased. That is because GDP has declined faster than debt has been reduced. The government continues to support the austerity program that its Constitutional Court has declared unconstitutional. It has no choice if it wants support from the ECB.
The situation in Portugal, and in most of the southern nations, has responded well to the medicine demanded by the EZ Troika. The medicine has not worked, but the Troika cannot admit that it has imposed bad medicine, and the affected governments are not in position to express unhappiness with the prescribed remedy for their economic problems.
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