assistance programme : the budget deficit significantly declined and public debt is now on a downward trend ; private sector deleveraging is ongoing ; and the banking sector is more robust, with a stronger liquidity position, higher solvency ratios and improved asset quality. the adjustment programme has widely been regarded as a success. in my view, this success was due to three factors : 1. first, programme ownership. portugal was committed to the implementation of the programme, which was accepted by the population. a constructive dialogue with social partners was possible and this was key to ensuring the success of the quarterly reviews. 2. secondly, the speed and intensity of the response from the tradable sector, in particular exports, was key to the rapid rebalancing of external accounts and mitigation of the impact of lower domestic demand on the non - tradable sector. 3. third, the maintenance of confidence in the banking sector, as evidenced by the behaviour of deposits. this was crucial to preventing the economy from collapsing with a credit crunch and avoiding the imposition of capital controls. it is important to remember that an adjustment programme is always a short - term programme whose effects are only sustainable if there are structural and institutional adjustments that prevent repetition of the conditions that led to the need for adjustment. as such, notwithstanding the undisputable progress, there is no room for complacency. 2 / 3 bis central bankers'speeches a lasting trajectory of growth and convergence towards our european partners depends on our capacity to generate and maintain high levels of employment and productivity. this is a necessary condition to ( i ) bring our workers ’ wage levels closer to european standards ; and ( ii ) finance the welfare state in a context of unfavourable demographic developments. the challenge is thus one of activating the ‘ levers ’ of employment and productivity. i will briefly highlight the four most critical ones. 1. first, investment. it is vital to increase both the stock of capital and investment in intangibles, learning from past mistakes, particularly by scrutinising investment projects in a far more demanding way. of course, we cannot ignore the fact that the recovery in investment is constrained by the ( still ) high indebtedness level and low savings rate of the portuguese economy. this means that higher investment will have to be financed through an increase in equity, either from existing shareholders, or the entry of new domestic or foreign shareholders. 2. second, skills. in portugal, employees ’

skills have improved considerably in recent years but important gaps remain in relation to european averages, which we need to continue to close. 3. third, management. we need management frameworks that encourage openness to risk and favour decentralised decision - making. it is well documented that firms with a more decentralised management and higher educated managers are more open to disruptions and thus more innovative. 4. fourth, innovation policies. public policies that are innovation - friendly are also critical to stimulate productivity and employment. let me conclude. the challenge we are confronted with is that of generating and maintaining high levels of employment and productivity to ensure a lasting trajectory of growth and convergence with our european partners. we ’ re talking about the deep institutional and structural foundations of the economy. the task is hard and will take time to complete before it bears fruit. this means we need to be determined and tenacious and focus on what really matters from a long - run perspective. i will of course be happy to take questions, or listen to any comments you may have. thank you for your attention. 3 / 3 bis central bankers'speeches