After years of continuous growth in public spending and public debt, the Portuguese economy finds itself in a bleak situation in the context of the ongoing international crisis. Internal and external imbalances have been steadily accumulating and recent events in Greece have placed increased pressure on the country’s debt. The combination of a stagnant economy with the pressure of large budget and current account deficits leaves little room for optimism. The EU bailout package addresses some of the more immediate liquidity concerns but will prove unsustainable if structural adjustments do not follow.