Former President Cavaco Silva Demands Structural Reforms, Warns of Democratic Decay Without Economic Growth

Former President Aníbal Cavaco Silva issued a sharp warning this week that Portugal risks "deterioration of democratic quality" unless the Montenegro government pushes through structural reforms opposed by what he called a "reckless" parliament more interested in populist gestures than economic sustainability.

In an essay published in weekly Expresso titled "State Money Doesn't Fall From the Sky," the former president and prime minister (1985-1995) laid out a stark diagnosis: Portugal must achieve 3-4% annual GDP growth to stop being a "relatively poor" EU member state, and that requires reforms the opposition parties lack the courage or competence to support.

Three Targets, Three Criticisms

Cavaco Silva reserved particular scorn for the current political landscape:

On the Socialist Party (PS): "Governed between 2015 and 2024 moved above all by preservation of power, demonstrating clear aversion to structural policies and wasting opportunities." He accused the party of being "tangled in ideological prejudices that clash with economic and social reality."

On Chega: "A political force devoid of minimally coherent ideology that has revealed obvious technical unpreparedness to discuss policies for the country's progress." He dismissed leader André Ventura's comparisons to Italian PM Giorgia Meloni as "totally unwarranted."

On the opposition broadly: "Engages in wearing-down actions aiming to prevent reforms, joined by attempts to govern the country from parliament." He cited approval of measures reducing fiscal revenue and increasing rigid public spending as evidence of "opposition lacking discernment."

The Reform Agenda Cavaco Endorses

Without explicit endorsement by name, Cavaco Silva praised current government initiatives on:

• Public administration reform and bureaucracy reduction
• The digital business portfolio being developed by the State Reform Ministry
• Finance Ministry efforts to maintain fiscal sustainability

He argued these structural changes are essential to increase productivity and provide the state resources needed for "better salaries and pensions, higher quality public services, and fairer taxes."

A Warning About New President Seguro

In what may be the most politically significant passage, Cavaco Silva stated he does not foresee newly inaugurated President António José Seguro—formerly PS leader—"being an obstacle to approval of reforms Portugal urgently needs," based on his previous interactions with Seguro.

This pre-emptive framing puts the new president on notice: any opposition to government reform efforts will be portrayed as obstructionism by senior PSD figures, despite Seguro's constitutional role as a moderating force rather than government cheerleader.

Implications for Residents and Businesses

Cavaco's intervention signals that Portugal's center-right establishment views the current moment as critical for structural change. For foreign residents and businesses, this means:

• Administrative simplification initiatives like the digital business portfolio are likely to proceed despite opposition, potentially easing bureaucratic hurdles for entrepreneurs
• Fiscal stability may trump popular demands for tax cuts or spending increases, maintaining Portugal's improved creditworthiness but potentially limiting social program expansion
• Labor market reforms could be on the table, though Cavaco didn't specify—past PSD governments have sought greater flexibility in hiring and firing rules

The essay also reveals deep anxiety within the Portuguese establishment about populist politics. The harsh criticism of Chega—now Portugal's third-largest party—reflects concern that economic stagnation feeds extremism.

Echoes of Passos Coelho

Cavaco's intervention deliberately mirrors former Prime Minister Pedro Passos Coelho's recent public letter calling for reforms. Both former PSD leaders are applying pressure on current PM Luís Montenegro from the right, arguing he should be bolder in confronting opposition resistance.

This coordinated messaging from PSD elder statesmen suggests a deliberate strategy to provide political cover for controversial reforms by framing them as historical imperatives rather than partisan choices.

The Populism Trap

Most striking is Cavaco's explicit linkage of economic reform failure to democratic decay: "Without reforms necessary for robust economic growth there is serious risk of strengthening populist political forces and deterioration of our democracy's quality."

This argument—that center-right technocratic reforms are democracy's best defense against extremism—will be tested as the minority government attempts to pass measures opposed by both left and far-right. Recent polls show Portuguese voters increasingly skeptical of traditional parties' ability to deliver prosperity.

For Portugal's large immigrant and expat community, the debate has direct implications: economic reforms typically include labor market and regulatory changes affecting hiring practices, business formation, and public services. Whether Cavaco's vision of reform-driven growth or the opposition's emphasis on social protection prevails will shape Portugal's attractiveness and livability for years to come.