Portugal is a country with massive debts, an unemployment rate of 12 per cent and a contracting economy.
So for the new government, led by the victorious Social Democrats, the challenges are huge. Having formed a coaliton with the smaller conservative Popular Party, they now have to push through tough austerity measures in order to repay a huge bailout.
But can the new government turn around what is considered to be the European Union's poorest country? And will the tough spending cuts and higher taxes lead to unrest on the streets?
Inside Story discusses with guests: Antonio Costa Pinto, a professor of political science at the University of Lisbon; Joao Caiado Guerreiro, a business lawyer; and Vanessa Rossi, an economics expert at Chatham House.
This episode of Inside Story aired on Monday, June 6, 2011.