RESTRICTED Report No. EA-128a RETURN TO REPOR-ytb o'GK This report was prepared for use within e Bank. VJT It4publishe nor may I it be quoted as representing the Bank's iews. Th n res onsibility for the accuracy or completeness of the onte r or . INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT THE ECONOMY OF PORTUGAL May 24, 1962 Department of Operations Europe Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized
Transcript
RESTRICTED
Report No. EA-128a
RETURN TOREPOR-ytb o'GK
This report was prepared for use within e Bank. VJT It4publishe nor may Iit be quoted as representing the Bank's iews. Th n res onsibilityfor the accuracy or completeness of the onte r or .
INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT
THE ECONOMY
OF PORTUGAL
May 24, 1962
Department of OperationsEurope
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CURRENCY EQUIVALENTS
1 U. S. $ = 28. 75 escudos1 Portuguese escudo = U.S. cents 3.481 million escudos = U.S. $34, 7831 billion escudos = U. S. $34, 782, 608
OTHER. EQUIVALENTS
1 hectare = 2.471 acres
1 millimeter = 0. 0394 inches1 meter = 39. 37 inches1 kilometer = 0. 621 miles
1 kilogram = 2. 205 pounds1 metric ton = 1. 102 short tons
Note: All series refer to Metropolitan Portugal, unless otherwise specified.
SU1MARY AND CONCLUSIOWS
1. In Metropolitan Portugal, almost half the 9 million people live on theland, and the standard of living is one of the lowest in Europe. There issubstantial migration to the Overseas Provinces and South America, andpopulation increase is only 0.8% per year.
2. Economic growth averaged 4% per annum during the 'fifties. Poor soil,low rainfall and hilly terrain combined with problems of land tenure andfarm management to make for a virtual stagnation of agriculture. On theother hand, with government assistance and low labor costs, manufacturesexpanded rapidly, and the infrastructure was greatly improved. The govern-ment pursued conservative fiscal and financial policies. The budget wasbalanced, and overall economic policy was strongly anti-inflationary. Therise in prices over the last decade was moderate, and substantial inter-national reserves were accumulated.
3. A sign of change in official policy was the Six-Year Development Planlaunched in 1953. The Second Development Plan, 1959-1964, is a list ofhigh-priority investments in both private and public sectors for which thegovernment is prepared to help mobilize funds if necessary. Considerablereliance is placed on external sources of finance. The plan covers onlyone-third of total investment, and less than half of government investment:it is not meant to be a blueprint for over-all development.
4. Three major economic problems confront Portugal. One is the stagnationin agriculture. Another is the shortage of investment funds, and the needto generate more public savings through fiscal measures. Finally, Portugal'sforeign trade position is not strong. The deficit on the balance of tradeis large and is growing, and the overall balance of the escudo area restson the current account surplus of the Overseas Provinces with foreigncountries. At present, Portugal has a large favorable service account withthe Provinces, which also provide raw materials and markets for Portuguesemanufactures.
5. The economic and political life of Portugal is closely entwined withthat of the Overseas Provinces, which constitutionally are an integralpart of the Republic. The evolution of the relations between Portugal andthe Overseas Provinces could therefore have economic implications ofconsiderable significance, which it is not at the present time possibleto discern.
6. Apart from uncertainties which are essentially political in origin,there are good prospects for increased investment and for income growth at4 to 5% per year in Metropolitan Portugal. Manufacturing may be expectedto continue its rapid growth, and forestry and fishing should expandsteadily. The government should be able to increase its revenues and its
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development outlays without inflationary pressure being generated. Finally,
export income should grow some 41 per year, principally through increasing
exports of fish and forest products and textiles; and the service account
should be strengthened by rising receipts from tourism and emigrants.
7. At the end of 1961, Metropolitan Portugal had a low external public
debt (P76 million), a small debt service ratio (1.4% of exports to foreign
countries), and large international reserves (;P692 million). Greater
development effort will for some time place a strain on the balance of
payments, and while there is some scope for increasing local savings, the
low level of incomes means that any substantial advance will require external
capital in addition to local resources. Even taking into account the
additional $1.27 million borrowed abroad since the beginning of 1962 (including
$90 million for the Tagus bridge), Portugal's external debt position,
financial structure and growth prospects indicate a satisfactory margin
for increased foreign borrowing.
THE ECOJOMY OF PORTUGAL
I. NATURAL AND HIMAN RESOURCES
1. Constitutionally, the Republic of Portugal consists of the mainlandon the Iberian Peninsula of southwest Europe, the adjacent Madeira andAzores Islands, and the Overseas Provinces, principally in Africa, an areaamounting to some 840,000 sq. miles with a population of 23 million people,mostly African. This report is primarily concerned with NetropolitanPortugal which, including Madeira and the Azores, has an area of 35,400sq. miles and a population of 9.2 million.
2. Portugal is a predominantly agricultural country, and yet much ofthe land is ill-suited to farming. The scarcity of good agriculturalland is in part due to low rainfall and annual summer droughts, in partto poor soil and the hilly nature of much of the countryside (see maps).On the other hand, the mountains of the north-central part of Portugaland of nearby Spain provide abundant water for the generation of electricity.Lxtensive forests and good deep-sea fishing are other important economicassets. There is also a wide variety of minerals, but they are oftenfound in deposits too small or inaccessible for economic exploitation.
3. About one-third of the mainland population lives in the principalcities of Lisbon and Oporto, and there is also a substantial urban popula-tion in industrial towns nearby. Almost half the population lives on farmsor in rural villages in the north or center of the country, the remainderof the farm population being tenant farmers and laborers on large estatesin the south.
4. The population has grown slowly - by about 0.8' per year over thelast decade (Table 3). Although the rate of natural increase is close to1.2%, a steady flow of migrants to the Overseas Provinces and to SouthAmerica has drained off about one-third of the annual increase. Thisemigration has eased the pressure of increasing population in the farmareas. So, too, has the drift to the cities. With the industrious habitscommon to most Portuguese, ex-farm workers have adapted well to city workand have acquired industrial discipline and skill.
5. The standard of living is low by general 'est European standards,per capita income being equivalent to about ,235 per year. Registrationsof motor vehicles (1 for 50 persons), the number of telephones (1 for 25)and the supply of durable consumer goods all indicate limited purchasingpower. Illiteracy, while less than the 40% recorded in the 1950 census,is still wide-spread among adults. Of those married in 1960, 20% wereilliterate; in the 1920ts, the proportion was 500. Hith improved medicalcare, the death rate has been halved in the last generation and is nowabout 10 per 1,000. The agrarian half of the population, with one-fourthof the national income, is clearly the poorest. On the other hand, thecitizens of Lisbon and Oporto, including a growing number of industrialworkers, probably receive 60% of national income. The concentration ofproperty, whether agricultural, industrial, or commercial, in relativelyfew families also indicates a very uneven distribution of income, which thepresent tax structure does little to change.
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II. POLITICAL LCONOI OF PORTUGAL
6. From the 12th Century until early in the 20th Century, Portugal wasa monarchy, successfully preserving its independence except for a shortperiod of Spanish occupation. In the 15th Century, under the leadershipof Henry the Navigator, the Portuguese pioneered the exploration of thecoast of Africa and Asia and parts of South America, and in so doingacquired an extensive empire. Subsequently, Portugal developed very closelinks with Angola and Mozambique, both being important as sources of rawmaterials, as export markets and as outlets for surplus population. Portugalkept tight control over the economies of these areas and profited substantiallyfrom its economic relations with them.
7. In 1910, the monarchy was overthrown and a republic established. Therefollowed some eighteen years of instability and financial chaos as rivalgroups competed for power. Then, in 1928, Dr. Antonio de Oliveira Salazaraccepted the post of Minister of Finance, and in 1932 he became Premier.His first measures were to restore financial stability by a series ofbalanced budgets and by control of the monetary system. Then, in 1933, anew constitution was introduced to ensure political stability and continuity.
8. Under the constitution, Portugal is a corporative state headed by aPresident whose acts are subject to veto by a National Assembly electedeach four years. In addition, there is a Corporative Chamber to advise theAssembly on draft laws submitted to it. Executive authority is effectivelyconcentrated in the hands of the Chief of the Council of Ministers, theposition occupied since 1933 by Dr. Salazar. There is one official party,the National Union Party. However, with the approval of the Supreme Court,opposition candidates may contest the Presidency in the seven-yearlyelections and may stand for election to the Assembly. Hitherto, the officialcandidate for the Presidency has invariably been elected, and just beforethe November 1961 elections for the Assembly the opposition candidateswithdrew from the contest.
9. Portugal is still in the process of creating the structure of a corpora-tive state. Corporations are now being established for each sector of theeconomy, their membership being drawn from associations of employers (gremios)and of workers (sindicatos). The complexity of government organization isindicated in Chart I.
10. The government established a large number of bodies to regulate almostevery branch of economic life. Banking is strictly controlled; capitalmovements to and from the Metropole and most domestic capital issues aresubject to license; agricultural prices are regulated; working conditionsare prescribed by law, strikes and independent trade unions being illegal;regulations limit freedom to enter or expand production in many lines ofindustry, and monopoly concessions may be granted for a period of years.W1hile the immediate purpose of these measures has been to safeguard financialand fiscal stability, the corollary has been a tendency to preserve at thesame time the existing pattern of production and wealth.
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11. The primary aims of Dr. Salazar's economic policy are the maintenanceof budgetary balance, accumulation of international reserves and avoidanceof debt. Monetary policy has relied on both quantitative measures andpowers of persuasion to restrain the growth of bank credit, while maintainingin effect comparatively low interest rates both for the government's ownborrowings and for loans to those private enterprises which have obtainedofficial designation as being of national importance.
12. Over the last decade, at least three important changes occurred ingovernment economic policies. One was a clear recognition of the economicimportance of the Overseas Provinces to the ietropole. Grants and loanswere made to hasten their economic development, and Portugal is now mcrkingtowards the establishment of free trade throughout the escudo area (seePara. 78 below).
13. Secondly, the government recognized that, while stability might beits prime economic objective, there was a need for more rapid economicgrowth if living standards were to be raised appreciably and the economydiversified. Accordingly, in 1953, a first attempt at development planningwas made with the introduction of a Six-Year Plan designed to increasepublic and private investment and national income more rapidly than in thepast.
14. Finally, following its accession to OEC, the government has recentlyjoined a number of other international economic institutions - EFTA, theFund, the Bank and GATT. This action appears to follow from the other policychanges, for membership of these international bodies reflects the needto secure access to foreign investment funds and to expand export earnings.
III. ECONOMIC STRUCTURE AND PERFORMANCE
Recent economic arowth
15. During the '50's, output rose by almost 50% (Table 4). This impliesaverage annual growth in real output of about 4% and in per capita incomeof 3%. In the last three years, 1959-1961, the pace of development appearsto have accelerated, output rising more than 5% annually.l/ This accelera-tion was9 however, accompanied by a marked deterioration in the balance ofpayments of the Metropole (Table 24). An appreciable increase in realincome therefore occurred, but from a level which was the lowest in WesternEurope. Indeed, with 4-5i annual growth, it would take Portugal almost ahalf century to obtain the living standards now prevailing in NorthwestEurope.
i/ In the absence of regular census and income tax data, Portugal'snational income statistics are based on inadequate surveys of thevarious sectors of production. Other series on the volume of outputmake it clear that marked growth has occurred, except in agriculture;but it may have been at a somewhat slower rate than indicated above.
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16. The largest contribution to the increased product was made by manu-factures which accounted for more than one-third of the total increaseand which by the late 1950's had become the largest sector of the economy.A considerable improvement in the infra-structure of the country wasreflected in improved transportation and in the threefold increase inelectric power output, Only in primary production was there virtually noincrease.
17. Gross fixed investment absorbed some 15' of GDP, with the proportionrising to 16-17% towards the end of the 1950's when the government wasincreasing its development efforts (Table 5). Net investment ranged between1.OJ and 12% of national income. Over half the investment went intomanufactures, power and transportation, as compared with some 10% devotedto agriculture (Table 6). For its part, the government emphasized invest-ment in transport, education and public health. Apart from its financialassistance to private investment, the government and its autonomous enter-prises together accounted for 15-20% of total gross investment.
18. Of gross investment, about two-thirds was financed by domestic savings,and about one-third from abroad. There was a large and growing surplus ofimports of goods and services over exports (Table 24), financed not by aninflow of capital but by emigrant remittances and substantial earningsfrom the Overseas Provinces.
Estimated Sources of Investment Funds(as percentage of GDP, late 'fifties)
Source of FundsGovernment surplus 3Private savings a
Net Domestic Savings 6Depreciation 5Foreign balance-1 6
Total 117
119. Net domestic savings rose over the decade from about 5% to 7% ofnational income. In general, the government provided about half of thesesavings from its sarplus of revenues over current expenditures. During1.959 and 1960, however, the government contribution declined in bothabsolute and relative terms, a growing proportion of savings being pro-vided by re-investment of profits and other private sources. The governmentis concerned about the proportion of savings being devoted to real estate
1/ Principally service account receipts from Overseas Provinces (4%)and emigrant remittances (2%).
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and other speculative investments, and it is now trying to check thistendency../ At the same time, it is accelerating its program, begun in1959, of mobilizing private savings through government bond issues, thereceipts being made available for public jorks or loaned to privatebusiness making high priority investments. Even with Portugal's relativelylow income, the savings effort is poor compared with that of many othercountries in a similar position.&/
20. No marked change in the composition of employment is reported to haveoccurred during the 1950's (Table 7). There was a slow movement of peoplefrom the land to industrial work in the towns, as well as a steady migra-tion to the Overseas Provinces and to countries in the Western Hemisphere.Nevertheless, there was apparently an increase in the number of farmworkers, and widespread evidence of low productivity and muchi under-employment. Unemployment was estimated at 31 in the 1950 ceno:us.
21. By European standards wages are low, both in rural work and in industry.Factory wage rates are about one-third of 'est European rates, and therise in real wages since 1948 has been slow (Table 15). After a decadeof virtual stagnation, rural wages rose by 25% in the last four years,but they are still only 30-40% of industrial wages.
22. The slow rise in manufacturing employment, while output was increasingquite rapidly, points to improved managerial efficiency and labor organiza-tion and the introduction of modern techniques. Portuguese labor ishard-working and has proven itself adaptable. Despite low standards ofeducation and limited facilities for technical training, productivity issufficiently high for the low money wages to give a cost advantage toseveral branches of industry in export markets as well as in displacingimports. This is particularly true of textiles and of other labor-intensiveindustries, for example, small electrical apparatus. The strict controlover wages and conditions of work and over the activities of the sindicatoswhich is exercised by the Ministry of Corporations also makes for a docilework force which is continually being reinforced by new recruits from thecountryside. The Statute of Labor grants certain fringe benefits interms of holidays, sick leave, medical attention, etc., but these benefitsare substantially less than in other Western European countries.
Principal economic sectors
23. Agriculture. Agriculture, including forestry and fishing, producesabout one-quarter of the GNP and provides employment for almost half thepopulation (Table 8). Moreover, agricultuxal products, whether in theirnatural form or processed, account for over 60; of total exports, theprincipal items being fish, wine, cork and other timber products (Table 23).
1/ E.g., the July, 1961 tax law includes higher taxes on property transfersand new regulations on real estate transactions.
2/ See United Nations: Vorld Economic Survey, 1960, Chapter 2.
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24. The principal agricultural activity is the raising of subsistencecrops for domestic consumption: cereals (wheat, rye, maize and rice),pulses and potatoes occupy half the cultivated area (Table 9). A majorpart of the output of olives, wine and fruits is consumed locally. The10% of cultivated land which benefits from irrigation is used to raiserice, corn and certain fruits and vegetables. Feed crops (barley, oats andbroad beans) are of minor importance, and there is virtually no cultivationof fodder crops.
25. Agricultural production has been stagnant for almost a decade. Fromthe early 1930's to the early 1950's, the cultivated area increased bymore than 20% and output by 30%. Uith no more land available and withyields static, there has been no further rise in output. Recently, how-ever, there has been some success in expanding commercial fruit and vegetableproduction, particularly tomatoes for canning. Livestock production hassuffered from the lack of adequate feed, and meat output (mostly, beefand pork) did not increase during the 1950's. The poor performance ofPortuguese agriculture compared with that of other Western European countriesis indicated in Table 10.
26. Over large parts of Portugal, natural conditions are unfavorable toagriculture. Soils are poor, rainfall is low and, in the north, theterrain does not favor rechanization (Nap 2). About one-fourth to one-halfof the presently cultivated area is unsuited to sustained agriculture.Nevertheless, with the lack of alternative employment, large areas suitedto forestry or pasture are under crops (Map 3). Methods of cultivationare primitive, too little fertilizer is used and the traditional croprotation is ineffective in maintaining soil fertility. Little use is madeeven of animal power. In general, there is a shortage of technical know-ledge and advice. Inadequate marketing arrangements, except for cereals,and the large number of middle men hinder the development of commercialagriculture.
27. These adverse conditions are accentuated by the system of land tenure.In the north, peasant proprietorship is widespread, and farms have beenfragmented over generations. Half the farms have less than one hectareunder cultivation, and most farms consist of several scattered tracts.On the other hand, in the south, large estates predominate. For Portugalas a whole, 1% of the 850,000 farms have 50% of the cultivated area,while half of the farms have less than 5% of the area. Finally, about one-fifth of the farms are held under lease, mostly on terms which do notencourage the maintenance of soil fertility.
28. Much could be done to change this situation. Until now, the governmenthas placed little emphasis on agricultural investment in its current Develop-ment Plan, only 17% of the 6-year total being for agriculture, and ex-penditures have so far lagged well behind the planned rate. There areplans for extensive irrigation in the south, but the government has stillto secure the passage of the land tenure legislation which is a prerequisitefor an effective program. The large farmers resist attempts to reduce
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their land holdings and to force them into producing new crops with whichthey are unfamiliar and which they believe would be less profitable thanthose presently sold at subsidized prices (see Para. 30). In addition,the government has apparently been hesitant to press its draft bills forconsolidation of farms in the north and for reform of the farm rentalsystem.
29. While the government subsidizes the prices of seed and fertilizers,these are still too expensive for most farmers. Moroever, the ratio ofextension workers to farms. (1 to 3,000) is still too low to support alarge-scale program for encouraging better crop practices. There is littledemand for agricultural credit for improvements from farmers of any size.Credit for the financing of annual crops is secured through money lenders,local credit cooperatives and commodity boards. Some development creditsare extended by the State Savings Bank and the Junta for Land Settlement.
30. The principal form of intervention and assistance by the state isthrough a number of boards (juntas) established to supervise the productionand marketing of various crops. These boards regulate prices and havesufficient resources to purchase either the whole crop or any unsoldportion of it. Thus, there is a fixed producers' price for wheat andguaranteed minimum producers' prices for maize, rice, barley, rye, beef,pork, wine, olive oil, milk for processing and wool. Except for olive oiland wine, the fixed prices exceed world market levels by from 30" to 100%.Imports are controlled by the government, usually, in consultation with theappropriate board.
31. Forestry. About one-third of Portugal is forest, mainly of pine oroak. Forest products contribute less than 5% of GDP, but they form thelargest export sector, accounting for some 25% of export earnings. Themost important items are cork (half of forest exports) and box board,exports of which doubled during the 1950ts. Pulp production and exportsare expanding rapidly, but the markets for pit props and for naval storeproducts (pitch and resin) are no longer growing.
32. Fishin . Only 1% of the GDP is attributed to fishing, but fish,chiefly-cod and sardines, form a basic part of the diet and contributealmost 15% of export earnings. Hith government help, the fishing fleetwas modernized and expanded during the 1950's, the total catch rose by50o, and export of sardines doubled.
33. Mining. Mining employs less than 1% of the work force and makes anequally small contribution to the GDP. A wide variety of minerals isfound in Portugal, but mining has suffered from the scattered nature ofdeposits and from the decline in world prices since the early 1950's(Table 11;). At that time, exports of wolfram, tin and pyrites provided7% of exports: now they provide about 31% Sulphur is extracted from ironpyrites, and the iron oxide is used in the recently established steel mill.Substantial deposits of low-grade coalf6und their chief market in a networkof standby thermal power plants.
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34. Manufactures. The difficulties which confront Fortuguese agricultureserve to point up the importance of manufactures as a source of increasingemployment and income. Following a period of stability in 1950-53,manufacturing output increased by some 7-8' per year. During the 'fifties,factory employment rose 20, as compared with a 7 increase in the workforce, and some 20% of investment was devoted to increasing manufacturingoutput. Much of this investment was used to widen the range of production.A 250,000-ton steel works, chemical fertilizers, pulp and paper, electricalmachinery and apparatus, rubber and petroleum products head the list ofnew industries. In addition, substantial growth occurred in such estab-lished industries as textiles, cement, fish canning and sugar refining.About half of the volume of output still represents food, textiles andtimber processing: the other half is supplied by the new and fast-growingchemical and metal products industries (Table 12).
35. Most establishments are small, having less than 15 workers, and anindustry often consists of a large number of small units operatinginefficiently and with antiquated methods. On the other hand, especiallyin the newer industries, there are large well-run establishments usingmodern techniques. Moreover, with good management and low labor costs,these firms are often able to compete in export markets (e.g., fertilizers,textiles, electrical and telephone apparatus) as well as to supply theOverseas Provinces. It is common for these firms to earn 10-20% on fundsemployed, and there is a widespread practice of financing further growthby re-investing profits.
36. The government has adopted many measures to foster industrial develop-ment. To reduce inefficiency and to increase competitiveness in exportmarkets and against imports, the government is now trying to reorganizeand merge compulsorily a large number of the small firms operating inold-established indtstries. Commissions of inquiry are reporting ontwenty industries,- and the government plans to enforce closures aftera transition period and to help finance new establishments for the mergedgroups. There are, however, many practical difficulties in bringing aboutsuch a reorganization on an appreciable scale.
37. For new industrial undertakings, the government may offer severalforms of support. A firm may be accorded priority in the developmentprogram and therefore entitled to apply for government funds (by loanor by stock purchase), to make a large public issue of stocks or deben-tures, or to borrow abroad with the guarantee of the government. In someinstances, as in the recently completed steel mill, the government maygrant the enterprise a monopoly for a number of years. Tariff protectionand tax exemptions may also be provided.
i/ For example: glass, kitchen ware, sugar refining, shoes, salt,tanning, resinous products, woolens, fish canning and saw milling.
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38. On the other hand, this detailed regulation of industry lessensflexibility and competitiveness. larkets tend to be shared among existingfirms, and dependence on government decisions on a wide range of issuesdoes not encourage an enterprising attitude. Sources of business initiativeare few, and the government's system of regulation tends to favor presentproducers at the expense of newcomers. There is little foreign capital inindustry but the government is now modifying its regulations to encouragecapital inflow, particularly when it is to be associated with locally-owned enterprises6
39. Electric Power. The increase of industrial output has been accompaniedby even more rapid growth in the use of electricity. Power consumption bymanufacturing industries quadrupled during the 1950's and is now about 2billion KWh per year. Capacity rose from 350 M1 to 1,400 NJ, and annualproduction now exceeds 3 billion KUh. The annual load factor of thesystem, 59%, reflects the high degree of industrial consumption. Almostall power is supplied by hydro-electric stations completed over the lastdecade (Map 4). Thermal stations, now chiefly used as stand-by plants,particularly in the dry summer period, provide only 20' of capacity asagainst 50% in 1950, and 3% instead of 54b of actual production. Despitethis recent growth, per capita consumption is still one of the lowest inEurope. At 330 K1h per year, it is only 10-20> of that of the UnitedKingdom or West Germany, and about half that of Spain.
40. The government has accorded high priority to investment in the pro-duction and distribution of electricity. Electrical undertakings areorganized in the form of share corporations with varying degrees of privateownership. The government or government institutions have provided directlyat least one-third of the capital requirements for the generation andtransmission companies. Some of these funds were direct loans, others wereshare participations. 1hile the government seldom has a majority of theshares, it exercises a strong influence on the management of the industry.Moreover, all important electrical installations of the country are con-sidered to be part of an integrated system irrespective of their ownership,and planning and dispatching are entrusted to a government office. Thegovernment also sets tariffs.
41. Transportation. In general, transport facilities in Portugal meetrequirements (Map 1). An indication of traffic volume is given in Table 13a.There is, however, a serious lack of coordination in the planning andoperation of the railroads, highways and road transport, and the Directorateof Land Transport in the Ministry of Communications is not adequatelyconstituted to carry out its function of regulating rail and road servicesand rates (see, for example, Para. 49 below).
42. The railroad system comprises 2,811 kms of broad gauge ( 5 t 6") and764 kms of meter gauge track. The permanent way is generally in goodcondition and a steady renewal program is in progress. Most of the rollingstock and the shops are over-age; but the property as a whole, whatever its
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age, is well maintained. New shops are under construction, and electrifica-
tion of the Lisbon-Oporto line and dieselization of most of the remainder
of the system are in progress, completion being planned for 1964. Some
600 million escudos (U.S. p21 million) was spent on capital works duringthe First Development Plan. The Second Plan, 1959-64, envisages an
expenditure of 1,500 million escudos (U.S. $52 million) of which 420million ($15 million) was spent in 1959 and 1960.
43. The Companhia dos Caminhos de Ferro Portugueses (Portuguese RailwayCompany) is an autonomous organization in which the government owns 49 ofthe stock, the balance being helf by the stockholders of the four former
private companies which were merged into the present one in 1927. Since
1947, the Company has been operating at a loss which the government has
assumed. Between 1956 and 1960, revenues averaged 770 million escudosannually. This was insufficient even for working expenses, some 880million escudos annually. Taking into account capital costs, the annual
deficit was 200 million escudos (Table 13b). The Company's position issomewhat anomalous: on the one hand, it has operational freedom; on theother, it is financially dependent on the government which, however, appearsto have given the Company a substantial degree of autonomy in its investmentprogram.
44. Portugal's highway system totals some 27,000 kms of which 17,500 are"national" roads and 9,500 kms are "municipal." The national roads,except in the vicinity of the big cities, where relocation is necessary,are in fair to good condition and are being gradually improved. During
1956-60, the national road authority (Junta Autonoma de Lstradas) spentsome 2 billion escudos, and it is authorized to continue spending at therate of 400 million escudos (U.S. $14 million) a year until 1970. Municipalroads are administered by the municipalities with some technical helpfrom the Ministry of Public Works. The government provides about 75' ofthe cost of construction and maintenance of these roads, and contributedabout 450 million escudos (U.S. $1.6 million) in the period 1956-1960.
45. There are some 200,000 motor vehicles of which 50,000 are trucks.Bus services are closely controlled, whereas long-distance private truckingis virtually unregulated.
46. The Second Development Plan includes the construction of a tollsuspension bridge over the River Tagus at Lisbon. In A'ril 1962, theExport-Import Bank made a 25-year loan of $67 million (including capitalizedinterest) to cover the foreign exchange costs of the bridge, and a 13-year$23 million loan was secured from a French group to meet the local costs ofthe project. Traffic, at present approximately one million vehicles perannum by ferry, is forecast to reach 10 to 12 million a year by 1980, andit is estimated that tolls would pay for the bridge in 17 to 20 years afterits opening in 1965. Agreement on the need for the bridge is by no meansunanimous, particularly in view of the size of the foreign exchange commit-ment involved.
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47. The two main ports of Lisbon and Douro/Leixoes (for Oporto) andseveral secondary ports are autonomous. The port of Leixoes is well andprofitably operated and is now being extended. Foreign consultants areat present advising on the operation and management of the port of Lisbon.
48. Domestic air services exist only between Lisbon and Oporto, and thetraffic is small. Lisbon is one of the busiest international airportsin Lurope, and Portugal has a small international airline subsidized bythe government.
49. Between Lisbon and Oporto, three developments are under way: electri-fication of the railway, improvement of the existing highway, and constructionof a toll highway. However, no coordinated study has been made of thetraffic expected to be generated and served on these routes. This exem-plifies the need for transport coordination, and the Minister of Communicationsis now setting up a committee to survey the matter.
50. Tourism. Throughout the 1950's, Portugal attracted an increasingnumber of tourists. In 1960, over 350,000 foreigners entered Portugal,as compared with 75,000 in 1950. Over the decade, gross tourist receiptsrose from 250 million escudos to about 700 million in 1.960, and thetourist trade now constitutes as large an earner of foreign exchange asthe long-established wine industry. In recent years, the government erecteda chain of wayside inns (pousadas) especially for tourists and helpedfinance a number of large hotels in Lisbon, Lstoril, and other tourist areas.
IV. FINAN-CE AND DEVLOPMENT PLANNING
Money and banking
51. The Banco de Portugal is the government central bank and the issuebank for metropolitan Portugal. It is required by law to hold gold bullionand certain specified foreign currencies equivalent to at least 50% of itsnote circulation and other sight liabilities. At the end of 1961, totalholdings of gold and foreign exchange, almost all in convertible currencies,were equivalent to 75% of sight liabilities. There are also two banks ofissue for the Overseas Provinces, but the Banco de Portugal controls theforeign exchange transactions of the whole escudo area. There are twentycommercial banks, and two of these are predominant, having 50% of thereserves and capital. The central bank regulates their credit policy,setting the discount and re-discount rates and prescribing the minimumreserve ratios which they are to maintain. Other important financialinstitutions are the Social Security Fund, the State Savings Bank and therecently established National Development Bank.
52. The use of credit is not highly developed in Portugal. In part, thisreflects a widespread lack of banking experience; in part, it is a matterof the laws and customs which govern banking practice. The commercialbanks maintain a high liquidity ratio, about 25-. By law, their cash,
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deposits with the central bank and holdings of development promissory notes
(see Para. 55 below) must together be equal to at least 15 of demanddeposits; and there must also be a 5% reserve against time deposits. Thebanks are clearly preserving a wide margin of safety. In addition, almost80% of their loans are in the form of short-term commercial bills, fullysecured by tangible assets (Table 14).
53. Despite this conservative banking system, there was a substantialexpansion of both currency and credit over the last few years. Total moneysupply is about 40% above the 1955 level, which is a more rapid increasethan that of GHP. Between 1955 and 1960, the principal increase was indemand deposits (up almost 50%). In 1961, the absence of any increase inadvances in the face of the severely adverse balance of payments, resultedin a contraction of bank deposits which was, however, more than offset byan increase in the note circulation (Table 14). Even with this increasein money supply, retail and whlesa2e prices rose but slowly (8-100) overthe last six years (Table 15). However, with the large incrD,se in imports,to which the expansion in moneIy inccnes contributed, the balance of tradedeteriorated substantially (Table 24).
54. There are several signs that the financial structure is becoming moredeveloped, and that the government is able to raise more money in thecapital market. During the last six years, there has been a decline inthe liquidity ratio of the commercial banks from one-third to one-quarter,a larger structure of credit being built on existing reserves. An increasein savings is suggested by the threefold rise in time deposits during1955-60, which also indicates a growing public preference for investmentthrough the banking system. Finally, the government took steps to broadenthe public capital market, which has long been restricted to supplying therequirements of a few leading corporations and to small issues of govern-ment bonds. To encourage acceptance of new issues and to draw moreprivate savings from the banks into the market, the government may take upa portion, or may make a simultaneous loan to the borrower. This may bedone directly or through the leading government financial institutions -the Social Security Fund and the State Savings Bank. Secondly, to helpfinance the Development Plan, the government is now resorting more to thecapital market (Para. 61). In all, the government and private borrowersapproved by the Ministry of Finance are now raising some 2 billion escudosthrough the market annually..!/ However, the government makes a larger partof its borrowings directly from commercial banks and other financialinstitutions, and private enterprise secures the bulk of its requirementsfrom re-investment and other non-market sources.
55. One of the most important new financial techniques is the issue ofdevelopment promissory notes. During 1959-64, the government plans toissue 3 billion escudos of these notes. Part of the proceeds will be usedto provide finance for the National Development Bank, a government agencyestablished in 1.960 to lend to private and public enterprises in MetropolitanPortugal and in the Overseas Provinces. These notes, of which the first 500million escudos were issued in 1960, are for periods of from one to fiveyears, with 1.5% interest per annum, and may be taken up only by the commercial
1/ In 1961, the government paid 3-4' interest on its issues, and private.li rowers 4-5'.
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banks and other credit institutions. They may be cashed at the central
bank at any time, or they may be renewed. They may form up to one-third
of the legal reserves of the credit institutions, and thus provide a more
renumerative way of holdinZ these reserves. For the economy as a whole,
their use to finance government development and other expenditures has the
same expansionary effect as a liberalization of reserve requirements.
However, so long as their volume is relatively limited and the commercial
banks maintain a high degree of liquidity, this monetary expansion cannot
be regarded as a strong inflationary factor.
56. ihile the Portuguese financial structure is markedly conservative,
and while there has developed over the last three years an apparent
shortage of savings relative to investment needs, the government has long
sponsored the maintenance of interest rates which are low by world standards
(Table 16). Uith Portugal's evident desire to borrow abroad, this dif-
ference may make for some complications. Government bonds yield little
more than 3 and private bonds about 4/. However, partly under the pressure
of events in Angola, there has recently been a tendency for these interest
rates to rise. While mortgages from private sources may cost 7%, they are
available from government credit institutions at 4 to 4-1/2%. Commercial
banks discount bills and make guaranteed loans at from 3 to 4%, the legal
maximum being 4-1/2%.
Public finance
57. As part of Dr. Salazar's program for maintaining economic stability,
the government consistently presented budgets in which there was a surplus
of revenues over current expenditures. Development was financed by these
surpluses, together with small amounts of domestic borrowing. However,
in the last few years, and again in estimates for 1962, revenues were
increasing less rapidly than expenditures, and it was necessary to increase
borrowing from the private sector (Table 17). Over the last 12 months,
the government's aversion to inflation and its strong financial managementhave also been reflected in two rounds of tax increases.
58. Government revenues are derived from a wide variety of taxes, the most
important being indirect: more than half the tax receipts come fromimport duties and other indirect levies (Table 18). There is no general
equivalent of a progressive income tax or of the corporate profits tax.While some personal incomes are subject to a low progressive tax,1/ pro-fessional incomes above 60,000 escudos (?2,000) are subject to a flat
percentage tax of 3%. Corporations are taxed on the basis of an imputedincome which they might have earned, given their capital stock, or else on
the amount of dividends distributed. A Special Committee has recentlyrecommended that the tax system be brought up to date and, despite strongopposition, the government is now introducing legislation to revise each
tax, beginning with those on property.
1/ The average rate is 5% on a taxable income equivalent to '.;2,000 to
4,000 per year; 8' on .p10,000; 14, on §20,000; and 28% on 440,000.
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59. Revenues increased some 7% per annum between 1956 and 1961, and theproportion of GNP absorbed by the government rose from 13% to 16%. Thistax effort is achieved despite the favorable treatment which the presentsystem affords to certain individual and corporate income earners.There is,therefore, ah undefined, but substantial, "taxable capacity" onwhich the government can still draw. An indication of the government'swillingness to tax the higher incomes was given in July last when propertytaxes and income taxes on high income groups were raised, as were salestaxes on automobiles, gasoline and liquor. A new 15' purchase tax on luxurieswas introduced and a special tax imposed on hotel expenditures. These taxeswere intended to last only for the duration of the Angola crisis. In the1962 budget, all except the hotel tax have been continued for another year,and further taxes have been imposed on real estate and industrial profits.
60. The growth of expenditures was even more rapid than that of revenues.They rose from 14% of GNP in 1956 to 18% in 1960, and it appears that theynow absorb about one-fifth of the country's production. Current costs ofgovernment operation increased with the rise in salaries in 1959 and withthe debt service entailed by borrowing for development and defense (Table18). With the increased efforts of the Second Plan, investment outlaysrose 80% between 1956 and 1960. Finally, with the operations in Angola,provisions for military expenditures were greatly increased in 1961. Defenseappropriations in 1962 are 15% above 1961, whereas the development budgethas not been increased. The military effort is now absorbing some LO% ofgovernment revenues, compared with 30% in 1956, and it accounts for one-third or more of total expenditures.
61. With the marked increase in expenditures on current operations, de-velopment and defense since 1958, government borrowing rose substantially.In 1958, loans were 0.71 billion escudoe; in 1960, they reached 1.7 billionescudos. For 1961, internal public borrowing of 2.6 billion escudos wasplanned, though, in fact, only 1.7 billion was sought. In this way, thegovernment is drawing on private savings for projects of national develop-ment and defense. The government originally intended to borrow l billionescudos during the Second Plan, 1959-64, but it is already clear that thisfigure will be exceeded: the 4 billion mark was reached by the end of 1961.This experience indicates that the market for government bonds, whether bydirect placement in private hands on the open market or through subscrip-tions made by savings institutions, was wider than expected.
62. Government debt at the end of 1961 was about 16.2 billion escudos, ofwhich 14 billion was domestic and 2.2 billion ($76 million) external. Debtservice of almost 1 billion escudos a year requires some 9% of governmentrevenues. Over the last few years, the Treasury'.s year-end cash reserveswere about 1 billion escudos, the December 1960 total being 1.1 billionescudos.
Development Planning
63. In the early 'fifties, the government became concerned with the slowrate of growth of the economy (2.8/ per annum during 1938-1952), the lowstandard of living, the shortage of employment opportunities, and the need
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to expand exports. To improve the performance of the economy, Portugalembarked on its First-Six-year Development Plan in 1953, and a SecondPlan was begun in 1959.
64. The essence of the plans is the government's decision to give prior-ity to public and selected private investment in certain sectors of theeconomy. These were agriculture, basic manufacturing industry, electricpower, transportation (excluding non-farm roads) and technical education.Projects are selected in each of these fields and. their execution andfinancing programmed over the six-year period. The plans, therefore, con-sist of a list of certain key investments in a number of fields, togetherwith estimates of the sources of finance and schedules of construction.The list of projects and the amounts to be spent are revised annually bythe Economic Council of Ministers. Certain projects in the OverseasProvinces are also included.
65. Both plans refer to little more than half of government investment:projects in the social sector - education, health and housing - are omitted,and highway investment is made from.,a special fund of 6 billion escudos,financed by regular budget and loan operations and to be spent during 1956-1970. Social investments are made on an annual basis and are financed fromthe ordinary receipts of the budget. Nor do the plans cover more than se-lected key projects in the private sector. The Second Plan, with an esti-mated total expenditure of 22 billion e:cudos in Metropolitan Portugal during1959-64, will probably account for about one-third of total gross fixed in-vestment.
66. The Second Six-Year Plan is twice the size of the First, and itsemphasis is on basic manufactures, whereas the First Plan gave priority tcelectrification. Transportation remains a key sector, and both plansallocate only a small proportion of resources to agriculture (Tables 19 and20).
67. The government and government institutions are the principal sources cffinanco, but the Second Plan is marked by a reliance on external borrowingfor about one-fourth of total plan resources. This would mean a capital in-flow of 6-7 billion escudos during 1959-196h, a rate of foreign investmentfar in excess of that attained in the past. Of this inflow, about 1.5 bil-lion is intended for the bridge over the River Tagus. The foreign lcansrecently negotiated for the bridge were equivalent to more than 2.5 billionescudos, including some 420 million escudos of capitalized interest, So far,3.7 billion escudos of long-term external financing have been secured for theplan, and there are large supplier credits arranged for various basic indus-tries. The government's own contribution of funds would also include theproceeds of substantial internal loans.
68. During the first half of the plan period, 1959-61, performance was behindschedule. A principal shortfall was in agriculture, nntably in irrigation andland reform. In the second half of 1960, expenditures were well above theplanned annual rate, particularly for the completion of the steel mill, andthe total outlay of 4.4 billion escudos in 1960 was 50', above 1959. Therewas, however, a decline in the rate of expenditures during 1961.
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69. The existence of a plan and its stated purposes may help galvanize thePortuguese economy, stimulate its businessmen and workers to achieve morerapid growth, and harness private savings to key undertakings, whetherpublic or private. However, there is no long-term policy regarding thevolume of public investment, and no detailed blueprint for achieving thestated overall goals of a 4.2O per annum increase in GNP and the creationof 20,000 new jobs each year. The fact that the volume of investment re-quired by the projects selected in 1959 tapers off after 1961 indicates thetentative nature of the plan. Moreover, with its limited scope, the plan isnot designed to coordinate various kinds of public and private investment.
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V. THE OVElISEAS iRhOVTNCES
70. Of the 14 to 15 million people in the Overseas Provinces, 80% livein Mozambique and Angola. Illiteracy is widespread and voting rights haveuntil recently been limited to whites and lassimilados'. In July 1961,however, the franchisewas extended to literate Africans, and the systemof requiring six months compulsory labor each year from native Africanmen was abolished. Incomes are very low, even for many of the one-halfmillion whites living there, and the average may be as little as .jP40-50per capita, compared with Portugal's $235. The provincial economiesdepend on overseas trade, principally with Portugal. Annual exports are7 billion escudos, as compared with Portugal's 9.5 billion, and govern-ment revenues (all raised locally) are 7 billion escudos, compared with10 billion for Portugal itself.
71. Apart from subsistence farming, the Overseas Provinces are principallyproducers of primary products for export. The main products and exportsare coffee, cotton, sugar, sisal, tea, cocoa, maize, copra, iron ore anddiamonds.
72. The Portuguese Government and private investors and settlers organizedthis export trade and provided the infrastructure on which it is based. Inaddition, part of the Development Plans is devoted to priority investmentsin the Provinces, designed to increase the volume and diversify the rangeof exports. Angola and iozambique may have great economic potential. Thegovernment is creating a large electric power capacity on the Cuanza Riverin Angola, where it hopes to develop aluminum and other industries withcheap power. Again, for Nozambique, an extensive 5-year study is nowbeing made of the possibilities of the Zambezi River basin for powergeneration, irrigation, navigation and mining.
73. The Lanco de Angola and the danco Ultramario are the central banksand the chief commercial banks of the Overseas Provinces. Their policiesare subject to the control of the Banco de Portugal and of the metropolitangovernment working through the provincial governors. At present, thecurrency issued by these central banks is not convertible into metropolitancurrency at par or without the consent of the Banco de Portugal. Theinflow of foreign capital is strictly controlled by the Metropole, and hasin fact been negligible except for railroads and diamond mining. The princi-pal financial assistance from the Metropole is through the inclusion ofoverseas projects in the Development Plans, with part of the outlays beingfinanced by loans or grants from the central government. For 1959-64,investments of 9 billion escudos are planned, of which 5 billion are to beprovided by Portugal. However, the normal costs of operation of theProvinces, including substantial development expenditures outside the plan,have been financed by revenues raised internally.
74. Portugal has benefited from the supply of raw materials at pricesregulated by the government, from preferential access to export marketsand above all from the substantial contribution which the Provinces maketo the balance of payments of the escudo area.
Balance of Trade and Payments of the Overseas Provinces, 1960
75. Especially for cotton, coffee, sugar and fibers, the Overseas Provinceshave a protected market in mainland Portugal. However, as indicated in theabove table, the principal part of their export trade is with third countries.On the other hand, Portugal supplies a much larger proportion of provincialimports, especially for Angola, and several Portuguese industries aredependent on these markets. About 4% of textile exports go to the Provinces,which are also responsible for the increased export of Portugal's ordinarywines during the 'fifties. Some 75% of exports of these wines - and 40% ofall wine exports, including port - are marketed in the Provinces. Fortextiles, various food and drink products, and building materials, quotasare fixed, establishing ratios between the import of these products fromforeign countries and imports from the Metropcle. In some cases, the ratioof imports to domestic production is also prescribed. Preferential dutieson imports from Portugal are usually 50% of the general rate.
76. The Provinces earn a large surplus in their trade with third countries,thereby contributing substantially to the strength of the escudo area. Theynormally incur a small deficit in their balance of trade with the Metropole,but there are no data on the service account between the Provinces and theMetropole (Table 24). However, Portugal itself consistently runs a largedeficit with the outside world, while the escudo area as a whole was inbalance or surplus (except for a slight deficit in 1960 and a large deficitin 1961). There is presumably, therefore, a large net payment on serviceaccount from the Provinces to the Metropole, probably at least 2 billionescudos per year.
77. The external reserves of the Provinces remained around 5 billionescudos in recent years, or about one-fifth of the reserves of the escudoarea. The Provinces have a public debt of some 4.3 billion, of which two-thirds is held in the 1ectropole. External debt cannot be incurred directly;the Metropolitan Government itself undertakes any external obligation, asit did for the Export-Import Bank loan to the Hozambique railroad (Table 1).Apart from the general regulation of foreign exchange transactions withrespect to third countries, there are controls on the movement of capitalbetween the Provinces and the mainland. The loverseas' escudo is notfreely convertible into the Metropolitan currency, and Portuguese investorsin A.-qola have recently had difficulty in repatriating funds.
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78. As part of its policy of completin, the integration of the Provincesand the Metropole, the government is working towards a full free tradearea for the Portuguese world. This would entail not only a singlecurrency throughout the escudo area but also a review of customs dutiesand quotas now existing between the No,itro,ole and the Provinces. As afirst step, the government has recently announced its intention to abolishmetropolitan import duties by the end of 1963 and those of the OverseasProvinces by 1971.
79. To help develop the provincial economies and to strengthen ties withthe Metropole, the government encourages emigration, particularly to An-ola.At the same time, this population movement eases the demographic pressurein the stagnant rural areas of Portugal. Over the last six years, netmigration to the Overseas Provinces exceeded 75,000, of whom 70% settled inAngola. This outflow absorbed over 12"' of the natural increase of theMetropole, thereby easing the problems of unemployment and under-employment.
80. The immediate crisis in Angola does not appear to have done permanentdamage to its economy. 1!hile economic life has been somewhat disorganizedin the north, the decline in coffee production has been no more than 25%.Coffee stocks represent more than one year's production, and exports havein fact increased substantially over 1960. Rather, the burden has fallenon the budget of the Metropole. In the longer run, there may arise theproblem of adjusting to fundamental changes in the political and economicposition in Africa which would adversely affect the marketing of Portugueseproducts and would substantially weaken the balance of payments of Portugal.
VI. INTTLRNATICNAL -COilC RELATTO\JS
The balance_of jayments
81. !ietropolitan Portugal is essentially an exporter of primary products,and e:-Portu come in large part from a limited range of industries - forestry,fish ig and viniculture. The other major export is cotton textiles. Smallquantities of minerals (tin, wolfram and pyrites) cand a small but growingvolume of manufactured products are also sold abroad. Partly on account ofdeclining prices, export receipts grew only 10% during 1956-60 (Table 22).However, for the decade as a whole, export receipts rose almost 80%.Allowing for rising import prices, the capacity to import rose 50%, or anaverage of more than 4/ a year, which is somewhat greater than the growthof GNP. Certain timber products (boxwood and pulp) and canned fish werethe leading growth exports, and substantial increases occurrad for textiles,ordinary wines and cork products (Table 23). Lxports of port ine, mineralsand some timber products grew very slowly. In 1960 and 1961., about 30%of exports to third countries went to EEC members, and a similar proportionto EFTA, with the U.K. taking 1.9%. Some 25% of all metropolitan exportswere to the Overseas Provinces.
82. Inports more than doubled in value during the 'fifties, their volumerising some 75%. Aiart from meat, sugar and coffee, imports of foodstuffs
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(10' of the total) showed no rising tendency; rather, they fluctuated withcrop conditions. On the other hand, the increase in imports was uniformlyrapid in primary materials and in machinery and other manufactures. Almosthalf of imports come from the LEC, particularly Germany, and 25% from theEFTA countries.
83. Portugal began the 'fifties with a substantial adverse balance of trade,imports being 50% above exports. With the slight decline in the terms oftrade in the late 'fifties (5,) and the greater increase in imports thanexports, the trade deficit with third countries reached 5 billion escudosin 1960 and 7.7 billion last year. Exports were 12% of GI in both 1960and 1961, but imports rose from 20% to 24%. This deficit position wasvirtually unchanged by the slight favorable trade balance with the Over-seas Provinces in 1960 or the slightly adverse balance in 1961 (Table 24).
84. ifith increasing receipts from tourism and the remittances of emigrants,Portugal maintained its traditional position of having a strong favorablebalance on invisible account. Together, these two items made a net contri-bution of 2 billion escudos to the 1960 balance of payments, compared with350 million escudos in 1950. Wet investment income is negligible, andtransport costs are an appreciable negative item.
85. In view of the small net inflow of private capital during the 'fifties(on average, less than 100 million escudos per year) and the absence oflong-term international borrowing between 1952 and 1961, transactions oncapital account with third countries did not meet significantly the deficiton current account, which rose from about 1 billion escudos in 1950 to3 billion escudos in 1960. Rather, this gap in Portugal's payments positionwas bridged almost entirely by the surplus on current account which theOverseas Provinces earned in their commodity and services transactions withforeign countries. This surplus rose almost eari passu with the currentaccount deficit of the Metropole. On this basis, the escudo area has on awhole achieved a favorable balance in most years, and foreign exchangereserves rose from 7497 million to >808 million between 1950 and 1959.!ith a marked rise in Portugal's imports in 1960, a slight decline inreserves occurred (Table 25).
36. During 1961, Portugal's imports rose some 25%. There were increasedpurchases of metals, machinery, wheat and raw cotton: and one-third of theincrease was accounted for by the delivery of two large liners by U.K.shipyards. Exports rose only 4%, and so the trade gap widened by more than2.5 billion escudos compared with 1960. As a result of this deficit and ofa relatively small outflow of private capital, external assets declined by$1.02 million during 1961. The year-end reserves of $692 million were equalto some 14 months of escudo area imports. To strengthen its balance ofpayments, the Government began a series of external loan operations in 1961.Since November last, some $140 million has been borrowed abroad, includinga $13.2 million 10-year credit under the U.S. P.L. 480 program, a $37.5million long-term loan from the est German Government and 390 million(including capitalized interest) from the Export-Import Bank and a FrenchGroup for the Tagus bridge (Table 1). In addition, the government is
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reported to be concluding a $20 million short-term loan with private banksin New York. External debt and prospective debt payments have thereforerisen appreciably in recent months, although much of the new debt requiresno amortization or interest payments over the next 5 years (Table 2).
Trade and payments policies
87. Because of the generally favorable balance of payments of the escudoarea and the accompanying accumulation of reserves during the postwar period,the escudo came to be regarded as a strong currency. Pith minor exceptions,foreigners were allowed to buy and sell escudos freely, whether for currentor capital purposes. Actually, all foreign exchange transactions aresubject to regulation by the Bank of Portugal. For imports and for paymentsfor invisibles, licenses are freely granted with respect to OECD countriesand to North America, except for certain agricultural products and rawmaterials. Payments to other countries depend in part on the provisionsof various payments agreements. Foreign exchange receipts for invisibleitems must be surrendered to the central bank. Capital movements betweenPortugal and other OECD countries are generally subject to prior authori-zation by the Minister of Finance, for example, for repatriation of invest-ment, Portuguese investment abroad or direct investment by foreigners inPortugal. In July 1960, control of capital movements was tightened, andit now covers amounts of less than 10 million escudos which were previouslyuncontrolled. Capital movements from the Overseas Provinces to thirdcountries are similarly controlled, and prior approval is also requiredfor the transfer of funds between the Provinces and the Metropole. Currentaccount transactions are, therefore, virtually free, while a substantialdegree of control is exercised over capital movements by Portuguese residentsand over the investment of funds in Portugal by non-residents.
88. The Portuguese tariff is designed to encourage industrial development,and protection has been extended readily to new undertakings. The ratio ofthe average rate of duty to the value of imports was about 25% during the'fifties. The tariff is also a principal source of government revenues,providing some 30j of the total. Traditionally imposed on a specific dutybasis, the tariff is being converted to an ad valorem one. As part of theprocedure of adopting the Brussels nomenclature and ad valorem duties,tariffs were revised in 1.958, and the rate of duty on many products is nowhigher than before. Quantitative restrictions provided further protectionto industry and agriculture.
89. In recent years, Portugal has taken some steps to liberalize itscommercial relations with other countries. Through the OELC, Portugalliberalized its quantitative restrictions to the extent that some 85%of trade is now freed, and in 1959, Portugal joined in forming the EFTA.While accepting the general aim of freer trade in industrial products,Portugal secured a special provision (Appendix G) in the Stockholm Conven.-tion which allows it twice the time of other countries for the eliminationof duties and abandonment of quantitative restrictions. Portugal joinedin the first round of reductions in July 1960, when import duties were cut20%. However, for Portugal, these changes were largely nominal in view ofthe revision of tariff rates. Then, under the special provision, the
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second and third rounds of reductions (each of 10) in July 1961 andMarch 1962 were confined to a list of products which contribute lessthan one-fourth of Portugal's imports from ITA. The normal schedule offuture reductions, with complete abolition of tariffs by 1970, appliesonly to goods not now made in Portugal or to goods for which exportsconstitute more than 15% of total output or to other goods specificallynotified by Portugal by July 1, 1960. Portugal obtained two furtherconcessions: duties may be raised on new industrial products until1972; and the general elimination of tariffs will not have to be completeduntil 1980, with only a 50 reduction by 1970.
90. By joining EFTA, Metropolitan Portugal sought to preserve access tomarkets in the U.K., its principal customer, and to increase exports, forexample, of textiles and sardines, to Scandinavia. Portugal also saw itselfin a favorable position in trade between the ELC and EFTA, hoping that itslow labor costs and cheap power would lead German and other ELC indus-trialists to choose Portugal as their production center in the EFTA area.Now, however, Portugal is disturbed at the uncertain future of EFTA. Ifthe U.K. joins the EEC, Portugal would lose the favorable investment posi-tion it envisages, and markets in the U.K. would be threatened unlessPortugal also joined the Community. However, Portugal is opposed to thoseaspects of the LC which involve a sacrifice of sovereignty or standardiza-tion of conditions of labor and social services.
91. Portugal has recently joined the GATT. For this purpose, the Metropoleand the Overseas Provinces are regarded as a unit, subject to two reserva-tions. Negotiations regarding the Provinces will not take place until theyhave adopted the Brussels Tariff Nomenclature later in 1962. Secondly,consistent with the exception allowed in Article 24 of the GATT, Portugalis working by stages towards a free trade area for the Portuguese world(Para. 78), tariff adjustments being made within the time limits allowedPortugal under the Stockholm Convention of EFTA (Para. 89). Although noformal approach has been made, Portugal has also decided. to seek membershipin the 1uropean Economic Community. The form of accession to be sought isnot known,but it is unlikely that the Overseas Provinces will be includedin the application, at least until the integration of the escudo area isachieved.
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VII, PROSPECTS FOR ECONOMIC DEVELOPMENT
Growth of National Output
92. Conditions for growth are least favorable in agriculture, where soilis poor, climate difficult, standards of technical education low and market-ing inefficient. In the absence of rapid progress on such major problems asland reform, irrigation, improved crop rotation and livestock betterment andfeeding, little growth in output can be expected. In forestry and fishing,however, the situation is much better. Portugal is well placed for a steadydevelopment of its forests. While the output of such products as cork, navalstores, and mining timber may be expected to grow only slowly, if at all,there is a growing demand both at home and abroad for paper pulp and boxwood.Given the limits of the annual allowable cut, output of forest products isexpected to grow some 2% p.a. over the next several years. With the reequip-ment of the fishing fleet and expanding world demand, the catch and marketingof fish is expected to increase by some 4% p.a.
93. With the Government's emphasis on basic industries and the extensionof financial help and tariff protection, growth in manufacturing should atleast match the 7.5% p.a. rate achieved since the First Development Planbegan in 1953. Few results can be expected from the Government's program ofindustrial reorganization for some years; and there are few industries inwhich capable business leadership can be expected to make substantial in-creases in output. Steel, pulp and paper, chemicals and fertilizers, andelectrical goods are the principal instances of large and rapidly growingindustries. Skilled labor is short, but the Government is giving priorityto technical education, and the availability of low-cost, adaptable laborshould encourage industrial expansion by both domestic and foreign enter-prises.
9h. Production of electric power is expected to continue its rapid growthas existing capacity is more fully used and new hydroelectric stations arebuilt. The Government is planning for an increase in output of 11% p.a.,somewhat less than in the first stage of Portugal's electrification, 1951-60.Such an expansion would allow power consumption to be raised substantiallyfrom the present low level of less than 2 kw. per worker. It is assumedthat the other services which comprise the remainder of the GNP will growat about the average rate of the commodity-producing sectors.
95. Over the next several years then, the economy should be capable ofgrowing at a rate slightly higher than the 4% p.a. of the 'fifties. Assumingcontinued substantial net emigration, this would imply per capita incomesrising by some 4% annually. A basic assumption for this estimate is that,together with whatever capital inflow may be achieved, the government andprivate sectors of the economy together save enough to finance the investmenton which this increase depends. The Government's financial position is strongand it should even be able to increase its revenue surplus over current ex-penitures; and private savings could be increased and better directed throughborrowing by the Government and private industry.
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Public Finance
96. While no estimate can be made of the future trend of defense expendi-tures, there appear to be reasonable prospects for strengthening the basicbudgetary situation. A substantial increase in government revenues is expectedto follow from several favorable elements in the economy. Non-farm income isestimated to rise by 6% per annum, With better tax administration, this shouldallow a rise of direct taxes by 6-7% annually. The increase in imports whichwill accompany rising incomes and investment should entail a related rise inreceipts from customs duties, for Portugalfs commitments for freer trade willhave little impact on revenues for some years. Finally, with total tax re-ceipts absorbing 16% of GNP and with only a slightly progressive income tax,there is scope for increased taxes on personal and corporate incomes, prefer-ably through revision of the tax system to bring it in line with modern prac-tice. The July 1961 tax increase could also be incorporated into the presenttax system. Total revenues may increase from their present level of about10 billion escudos (Table 17) by 7% or more--or at least 700 million escudos--per annum,
97. Current expenditures, excluding defense, have been increasing by some8% per annum and now total some 5 billion escudos annually. This would appearto be a sufficiently rapid rate of growth for a country with a less than 1%per annum increase in population, especially as the Government does not intendto embark on large social service undertakings. The surplus of revenues overcurrent expenditures could therefore increase by-300 million escudos per annum.
98. Finally, the Government is expected to continue borrowing for develop-ment purposes on the capital market and through savings institutions, as wellas borrowing abroad. The Government should be able to raise an average of1.5 billion escudos per annum in Portugal, thereby directly harnessing some20% of private savings to the development effort. Portugal's national debtis only one-fourth of the national product, and debt service is less than10% of revenues. A net increase in indebtedness of say 1 billion escudosper annum would entail a rise of less than 100 million escudos in currentexpenditures each year. 'Moreover, a large part of borrowed funds is likelyto be re-lent to public and private enterprises which would subsequently makedebt service payments to the Government. Provided military outlays do notincrease progressively, the Government should be able to meet the currentdemands on its resources and also to increase its contribution to developmentsignificantly on the basis of rising revenues, a sustained program of domesticborrowing and some resort to external financing,
Balance of Payments
99. From the point of view of development, the most important weakness inthe economic structure of metropolitan Portugal lies in its balance of trade.For some years, export receipts have fallen short of import payments by 4-5billion escudos and in 1961 the shortfall exceeded 7 billion escudos. Thereis no reasonable prospect of this gap being closed by an expansion of exports,Moreover, after allowing for emigrant remittances, the gap is largely filledby the current account surplus of the Overseas Provinces, and in the long runthis is an uncertain source of strength.,
100. It is estimated that Portugal's commodity exports will increase froalpresent levels of 9-10 billion escudos by 4% per annum, or at about the rate
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achieved during the 'fifties. Exports of textiles are expected to grow 5%per annum. Portugal is one of the world's low-cost producers, and it in-creased its cotton textile exports by 30% in 1960. However, last year theprincipal importing and producing countries reached a tentative agreementfor a slower and more orderly expansion of the cotton textile trade, andthis should allow Portugal a modest increase in exports. With favorabletimber supplies and cheap labor, Portugal has good prospects for exportingthe paper pulp which it will be producing in two additional plants to becompleted in 1962-63; and box board exports are also expanding. Timberexports, other than cork, may, therefore, increase some 7% per annum.Market prospects should allow a 4% increase in fish exports, especiallycanned sardines, and a 5% increase for fruits and vegetables, particularlycanned tomatoes. Exports of electrical products and other labor-intensivemanufactures should increase rapidly, though from a small base. On theother hand, market conditions are unfavorable for any appreciable rise inthe export of wines and cork, and there is only a modest potential for in-creasing exports of tin and wolfram.
101. With rising investment and with the expected increase in incomes,the demand for imports, over 14 billion escudos in 1960, is expected torise substantially, though the 25% increase in 1961 is clearly exceptional,To some extent, this tendency may be slowed by import substitution, notablyfor steel products, fertilizers, paper and certain types of machinery. Inany event, imports may be expected to rise faster than exports, and thiswould mean a continued increase in the trade deficit.
102. On the service account, Portugal should find its net receipts in-creased by an appreciable growth of tourist expenditures and emiigrant remit-tance.. With its historic and scenic interests, modern hotels and goodtransportation, Portugal could increase its tourist trade substantit!ly.As economic conditions become more favorable in North America. Bra .l andVene-ela, and as recent migrants establish themselves abroad, remittancesshould resume their upward trend. These developments could inreasE netinvisible earnings, thereby partially offsetting the expected rise in thetrade deficit.
103. Finally, it is expected that part of the payments gap generated byrising demand for consumer and investment goods will be bridged by a largervolume of capital imports. Private investment by European and U.S. firmsis lik--ly to increase as Portugal is recognized as a profitable base forcertiaii manufacturing operations, and the Government is actively secingmedium and long-term loans and supplier credits abroad to help finceimportant investment undertakings. Even so, the basic deficit on currentaccount (3 billion in 1960 and even more in 1961) would remain to be filledin large part by the Overseas Provinces.
VIII. CONCLUSIONS
lo. The major uncertainties that underlie an appraisal of the economicprospects of Portugal are essentially political in origin, in particularthe evolution of the relationships between Portugal and the OverseasProvinces and their impact on both the budget and the balance of payments.
-26-
The weakest facet of the economy itself lies in the adverse balance of tradeand dependence on a limited range of exports; and there is little prospectof reducing this deficit or of diversifying exports over the next severalyears. Internally, the stagnation of agriculture is a continuing drag onthe economy, and growth generally has been limited by the amount and composi-tion of investment and by the shortage of entrepreneurial talent.
105. Portugal has, nevertheless, good opportunities for a higher rate ofinvestment and income growth. On the basis of an abundant supply of low-costlabor and an adequate infrastructure in terms of transport and power, industryshould develop rapidly. Hitherto, metropolitan Portugal and the Provinceshave been able to finance investment almost entirely from their own resources:indeed, the escudo area has accumulated substantial exchange reserves. Now,for the first time, the increased investment effort is beginning to put astrain on the Portuguese economy, a strain which events in Angola have inten-sified. While, as has been suggested, there is some margin for increasingdomestic savings, average incomes are low by European standards. To supportthe present investment program without endangering financial stability andto cushion the probable continued decline in exchange reserves, Portugalwould be justified in seeking foreign capital.
106. There is in fact a substantial margin for increased foreign borrowing.Portugal is in the strong position of having large foreign exchange reservesand a moderate external public debt. At the end of 1961, external reserveswere $692 million, and external public debt $76 million. In 1961, debtservice was $3.5 million, which was equivalent to 1.4% of the merchandiseexports of metropolitan Portugal to third countries, or less than 1% ofthose for the escudo area as a whole. Recent borrowing has increased thesefigures substantially, although most of the new indebtedness calls for littlerepayment over the years immediately ahead. Annual debt service requirementsup until 1966 do not exceed 2 to 3% of 1961 merchandise exports. Thereafter,as service payments increase, the percentage will more than double (Table 2).
List of Tables
Number
External Public Debt Outstanding, April 30, 1962...................... 1
Estimated Contractual Service Payments on External Debt.............. 2
Population Growth of Metropolitan Portugal, 1950-1961.............. 3
Government Revenues and Expenditures, 1956-62....... . ............ .17
Composition of Revenues and Expenditures, 1956-62....................18
First and Second Development Plans, 1953-1964........................19
Composition of Investment in First and Second Plans..................20
Financing of Development Program, 1959-1960.....................,...*21
Composition of Imports and Exportsi 1950,1955-60......*.............22
Principal Exports and Imports, 1950, 15-1............2
Balance of Payments, 1950, 1955-61........... * ................ ..... 24
Official Gold and Foreign Exchange Reserves, 1950-1962...............25
Table 1
Estimated External Public Debt OutstandingIncluding Undisbursed as of Alril 30, 1962(In millions of U.S. dollar equivalents)
Item Total
TOTAL LUTERNAL PUBLIC DEBT 201.5
Publicly-issued bonds 1/ 20.1;20,863,580 Portuguese Ext. Series I, 3',
1902-2002 10.5A 1,200,408 Portuguese Ext. Series II, 3%,
1902-2002 1.4T' 9,502,588 Portuguese Ext. Series III, 3,
1902-2002 5.31 3,167,529 Portuguese Ext. Series III non-
interest bearing, 1902-2002 2.9
Privately-placed debt 23.3$23,340,000 from Seligman et Cie & Compadec, France,
5%, 1962-1975 23.3
U.S. Government loans 122.5Export-Import Bank 79.0
p12 ,45 2 ,208 Republic of Fortugal, 4%, 1952-1977 11.7067,359,000 Republic of Portugal, 5-3/%, 1962-1987 67.4
International Cooperation Administration/ 30.34.i27,500,000 Republic of Portugal, 2-1/2%, 1950-1983 23.1$ 8,851,000 Republic of Portugal, 2-1/2/, 1951-1983 7.2
Department of Agriculture 13.2'13,200,000 Republic of Portugal, 3-7/8%, 1961-1972 13.2
Loan from -Test Germany 37.5ri37,500,000 from Kreditanstalt fur "iederaufbau,March, 1962 (terms unavailable) 37.5
j1/ In 1924, portions of each series were stamped for repayment in poundssterling, the remainder being payable in Portuguese escudos. Theportions stamped in sterling were as follows:
3/ Series I E11,255,66031 Series II & 727,7033% Series III - 4,030,904Non-interest bearing
Series III 1,050,455
(see footnotes on following page)
Table 1 (Continued)
Estimated External Public Deht DutstandinaTn(-udinp Undisbursed as of A ril 3O, 1962
i/ (Continued)
In 1940, holders of Series I, II and III bonds were offered the right ofconversion into new internal 4% consolidated loan. The amounts of 3%1902 bonds so converted including portions payable in Portuguese escudoswere as follows:
3% Series I &13,632,7403% Series II 472,0483% Series III & 5,535,015
2/ Does not include e3,400,000 3%, 1956-1997, to Republic of Portugal forwhich Portugal has the option to repay in U.S. dollars or local currency(as of December 31, 1961 the amount outstanding was :,3,353,424.48).
Source: IBRD - Economic Staff.
Table 2
Estimated Contractual Service Payments on External Public Debt
Outstanding Including Undisbursed Due in F,oreign Currenciesas of April 30, 19621/
(In millions of U.S. dollar equivalents)
Debt out- Debt out-standing Payments during year standing Payments during year
Year plus un- Year plus un-disbursed Amorti- In- disbursed Amorti- In-January 1 zation terest Total January 1 zation terest Total
1/ Includes all debt listed in Table 1 prepared May 21, 1962 except $37,500,000long-term loan from Kteditanstalt fur Wiederaufbau, March 1962, for which ter.sare not available.
2/ Less than $50,000.
Note: Figures may not add owing to rounding.
Source: IERD - Economic Staff.
Table 3
Population Growth of Metrooclitan Portugal
Change From Previous YearMid-year Natural Increase Net Emigration Total Increase
Year estimate L Thousands Total ProvincesY! Thousands ((millions) (thousands)
1950 8.41 1,2 102 28 10 +76 +0.9
1956 8.84 1.1 95 39 14 +64 +0.7
1957 8.91 1.2 110 44 10 +59 +0.7
1958 8.93 1.3 121 46 13 +85 +0.9
1959 9.05 1.3 115 46 14 +81 +0.9
1960 9.12 1.3 119 40 10 +99 +1.1
Note: Povulation of Continental Portugal
1950 Census - 7.86 million.June, 1961 - 3.56 million.
ij Principally Angola
Source: Instituto Nacional de Estatistica - Anuario Demoorafico (1960),and other data from the Instituto.
Table 4
Gross Domestic Product by Major Sectors(billion escudos, current prices)
Current administration 2.41 2.54 2.65 3.14 3.33 3.32 3.4:3 3.5'
Investment 2.1L 2.58 2.79 2.94 3.90 3.32 4:
Total expenditures 7.60 8.23 8.69 9.75 11.34 10.49 11.78 12.46
% o \GTP:As 'Z of GNP
Debt 1 1 1 1 1 1
Defense 4 4 4 5 5 5 (6)
Total expenditures 14 14 15 16 18 17 (20 )
Total revenues 13 14 14 15 16 13 (16 )
j/ ( ) means relation between revised 1961 budget estimate (Table 17) and1960 GNP.
8ource: Ministry of Finance - Budget Documents; and Table 17.
Table 19
First &: Second Develon:ent Plans
!i2centae Percentaoein Plan Source in Plan
Sector of Investment 1953/58:1959/6 of funds 1954/5S:1959/6A
(actual) (plan) (actual) (plan)
Agriculture 11 17 Public
Manufactures & mining 16 29 Current revenue 12 15
Electricity 44 21 Internal loans 10 10
Transport &co.municationsi/ 26 30 Welfare institutions 19 6
Technical education _ 2 Special funds 16 3
100 100 Re-investm!ent 7 _1
Total outlays(bill. esc.) 10.3I 22.02/ 64 41
Private
Credit institutionsa private savings 26 26
Re-investrwent 6 732 33
Lxternal 26
Total 100 100
.*/ Lxcludes highways.2/ Lxcludes 1.7 billion escudos spent in Overseas Provinces./ Excludes 9 billion escudos planned to be spent in Overseas Provinces:
of this, 4 billion would be provided byFrovinces themselves and
5 billion by Portugal, half as a grant and half as a loan.
Source: Presidencia do Conselho - helatorio Final da Nxecucao do I Plando Fomento (1959),Plano do Fonento, 1959-64 (1959), other datafrom the hinistry of the Presidency.
Table 20
Composition of Investment in First & Second Plans(billion escudosT
Plan I Plan II Plan IISector 1953-58 1959-64 1959-60
1/ Rural roads and water supply: farm reorganization: storage.7/ Mining, fishing and unspecified "heavy manufactures".
Source: P-esidencia do Conselho - Relato-ric Final da Execuce- or P.and' y ke'lt (1959), Plano do Fomento, .?5?-t,4 (19"), cther datafrom the 'inijtry of tte P-esidency,
Table 21
Financing of Development Prcgr1959-1960
Source Bill. Lsc.
Government budget(inc. loans) 1.56 24
Special funds 0.28 4
Welfare institutions 0.72 11
Development Bank 0.62 9
Savings institutions 0.35 5
Re-investment 0.22 3
Total Public 3.75 57
Insurance Companies 0.01
Commercial banks and
private savings 1.58 24
Re-investment 1.23 18
Total Private 2.82 42
External 0.08 1
Total 6.65 100
Source: Data from the hinistry of the Presidency.
Table 22
Comgosition of ImDorts & 7:xports(billion escudos)
Automobiles 0.15 0.38 0.38 0.AO 0.47 0.56 0.49 0.561/ To foreign countries & to Overseas Provinces.2,' From foreign countries & from Overseas Provinces.
ource: Banco de Portugal - Relatorio, 1.952 & 1961 and other data fromthe Banco.
Table 24
Balance ofPayments(billion escudos)
A. Balance of Payments of ketrouolitan Fortural with Forei,n Countries1950 1) 5o 1957 5j 3 1252 1960 1
Source: Banco de Portugal - Relatorio, 1953 & 1960,and later data from the Banco.
Table 25
Official Gold & Foreign Exchange Reserves of the Escudo Area(3 millions)
End of- Total Of which:Z0Ld
1950 497 1,92
1951 592 264
1952 603 286
1953 665 361i
1954 714 429
1955 730 428
1956 754 448
11957 750 461i
1958 776 493
1.959 803 548
1960 794 552
1961: October 664 438
December 692 443
1962: March 676 446
Source: Banco de Portugal - Relatorio, 1960 andInternational Financial Statistics,May 1.962.
PORTUGAL
ORGANIZATION OF GOVERNMENT
PRESIDENCY of theCOUNCIL OF MINISTERS
D,pept t for Coodintion of PlOnning
Ministerial PlanniRg Committec
Depa rtment for Information ond Toris
Junto for Nucle- r EnergyTechnical Committee for Eoternal Economc
CooperationCentral Statistical Office
Finance Interior Justice Army Marine Foreign Affoir Economy Public Works Educatfion Overses Communications Corporains and eth~tt. to• Social Welfore Asstonce
Public Credit Junta Departmnt of Dep- tr-et of Department f Poblic Works for the Establishment and ln- Concil for Lond Council for Soci.
Public Treasury and Government Mrchant NavY Economic and District of Hort tera 1 Admnistration Transport WelfareProperty Department Dep.rtment of Consular Mattert Public Works Council Ecoomic Dep, rtment Speci.l Fund for Land Departrent of Laboor and
Public Account& Department Fishing Departmnt of Hydraulic Services Publi, Works and Com- Transport Corportions
lajnd Revnue Depa rtment of Junt. for Ma-n Highways municatios Dep- rtmnt Deprtment of Civil Departrent of Social Wel-
Cuotomo Depa rtmenrt Hydrography Depo rtment of Urban Developmn t Overs r Administrtion Aviätion fr r d HousingDep.rtment of Finance and N-ng.tion Dep. rtmnt of Poblic Boildiogs ond Overseao Customs Port of Li.bon
Dep.rtment of Credit and Monumet. Devrlopment Couocil Ports of Douro and
.on.uracef Leo"esGeogr-phic and Surovey Institute Centrl Junta for
___________________Ports
Junta for Smll Port
Secretary of Stat Secretary of Stft Seretary of State
for Agricultre for Commerce for Industry
Secretary of State'o Office Socretary of State's Offic Scretary of State' OfficeCooncil for Agricultore Econmic Coordination Indostri.l Council
Departmnt of Agricolturf Comission Depa rtmnt for tho Control ofServire- EUort Devlopment Fund Agriulturl ad Industrial
Dop.rtmnt of Livesotck DepartentofComnerc Product
Dep-rtment of Foretry Mines .nd GeologIcal ServicesSrvi Electrica1 Services
Junta for Lond Settlement Fuel Dep.rtmentCorn-ion for Expl-oives
National Institote for IndustriolECONOMIC COORDINATION ORGANIZATIONS Rae rch
Ministry of EconoryRegulatinE Committoo for R.w Cotton Ministry of Overseao
Rico Jonta for Cotton Eop.rto
Dried Crdfish Coffe "
SCtrealsof Anore" " Cereal"
. . . . . . . . . . . . Vgetable OilsChecical: And Ministry of M rinePhr-actical Products National Junta for M,rch,ot Navy
Natiooal Junto for Olive Oil CORPORATIVE ORGANIZATIONS
" "Fruit Associtions of ProducersaLivestork Product" Trader
Roi Prodoct. Mnufcturer-
" Wine Nationl Syndicrtes
" " "Wine (Madtir-) PeopWe' HousingNational Institute of Bred Fishermn' H.ousiog
Portogotse Institute for Fisb C-nning Federation
Institute for Port Witt Unoons
OCTOBER 1961 IBRD-906
MAP I
Viana doCCasleto
GREALEA
LeixaesOPORTO curd
'/c 0
CoP h1
Figueiro da Foz
CASTBRANCO
rmc bron es .
aldusda Roinh
SANTARý orta egre
Estremnoz In
PORTUGAL
LISBON GENERAL MAPVORA
,f0 25 50
MILES"
0 25 50,
KILOMETERS
EJASjnes
øøý Broad gauge railways
Meter gauge railways
Mvain roads
over 400 meters
Sdyves
Lagos Ovr
SEPTEMBER 1964 18BRD-892
MAP 2
MONTALEGRE O27n)PORTUGAL A-109 ý-
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PR ECIPIT A TION120 -
100 2°Columns: Monthly ranfal1 in milli- - - 80 2-
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Curve: Arerge mronthly ntmperatur, - TRAS OS MONTE$ o-Cen Ii ,rad - -M l N:H 0,-''''°
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IN MILLIMETERS
Lsthn500 -Mm( 20")
50-00 nm c ZO"- 39")
1000-150C, mm, (c9"- 59")
00-2000 mm ( 59"- 79") BA XO ALENTEJO2000-Z500 rrn,-(c.7 ) - . '
- FÅ RO(014m50 -800 m (c93" - 110') AR-363 2mm
AAT-17 3Z800mm k,nd oe (c110"and e r)SVT-12 5 -2B°
SOURC ES: 4020 4
Manuel de T-ran and Orlando Ribeira a
Gecografia d, España, v Portu,r al VoL. V,.......Montaner y S-mó, S.A., Bar-lona, 1955
**-Dan Stamslawki, The Indnvid-lity n1 fPortu,?al, Umversity of Tesas Pr--',Au,Slin, 1959
