Tags: Portuguese | Minister | Efforts | Fix | Crisis | May | Vain

Portuguese Minister: Efforts to Fix Crisis May Be in Vain

Monday, 28 Feb 2011 07:38 AM

Portugal promised on Monday to cut its budget deficit and implement reforms but its finance minister warned this may all be in vain if Europe did not take strong action within weeks to resolve the region's debt crisis.

Debt-laden Portugal is seen by many investors as the likely next candidate to seek an international bailout, following Greece and Ireland, after its borrowing costs rose sharply over the past year.

"I fear that if Europe does not take the necessary steps, all this effort (by Portugal) may have been in vain," Fernando Teixeira dos Santos told a conference organized by Reuters and local TSF radio.

Texeira dos Santos said he hoped the European Union would take clear measures to create crisis management mechanisms at two summits next month while Portugal forged ahead with efforts to cut its budget deficit.

Doubts are growing about Germany's willingness to expand the currency bloc's rescue fund or allow it to be reconfigured so it can buy the government bonds of troubled euro zone members, which is something that Portugal has said it seeks.

Teixeira dos Santos said Portugal will do all in its reach to deliver on its goals.

"We want to re-affirm in a clear way our commitment that, whatever may happen, we will do everything to meet the budget goals, and that we have available additional measures needed to correct the situation and guarantee reaching our targets," he said.

He said the country would launch a plan to boost savings, while structural reforms should eliminate price and salary rigidities in the economy as the government does its best to win back market confidence.

The minister said bailouts had failed to bring down market yields for Greece and Ireland, and Portugal remained convinced that it will not need such a rescue.

"Looking at what has been the experience of Greece and Ireland, it does not seem the financial markets are convinced that to resort to European aid resolves national problems and contributes to the stability of the euro ... It does not appear that what the markets want is for Portugal to request aid."

The premium investors demand to hold Portuguese benchmark 10-year bonds rather safer German Bunds was slightly lower on Monday at 443 basis points after Friday's settlement level of 446 bps.

The spread has rocketed from a little above 300 bps over the past three months.

© 2017 Thomson/Reuters. All rights reserved.

 
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Portugal promised on Monday to cut its budget deficit and implement reforms but its finance minister warned this may all be in vain if Europe did not take strong action within weeks to resolve the region's debt crisis. Debt-laden Portugal is seen by many investors as the...
Portuguese,Minister,Efforts,Fix,Crisis,May,Vain,portugal
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2011-38-28
Monday, 28 Feb 2011 07:38 AM
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