Portugal Debt to GDP Worsens As It Reduces Budget Deficit

Portugal has done exactly what the IMF, ECB and EU ordered. It has been an example to other countries on how to reduce budget deficits. The only problem is that GDP is shrinking as a result of fiscal austerity. Its hard to reduce the ratio when GDP keeps falling. Some argue that in the long run the medicine will work and the economy will resume growth. I guess we will have to wait to find whether the medicine is therapeutic or life threatening. It may turn out, as Keynes suggested during the Great Depression that the medicine will work in the long run, but he responded by telling us that in the long run we will be dead.