Portugal 'under speculative attack', PM says

Portugal has been seen by some investors as the next weak link in the euro zone after Greece.

Portugal 'under speculative attack', PM says

The Portuguese government will take all necessary measures to reinforce investor confidence in the economy and meet commitments on reducing the budget deficit and debt, Socialist Prime Minister Jose Socrates said on Friday as the Greek fiscal disaster threatened to engulf Europe.

Socrates told parliament his discussions on austerity strategy with the leader of the main opposition party, the centre-right PSD, were of great importance.

The PSD has suggested deepening austerity measures to ease investor concerns.

"I am sure that that decision we took to jointly monitor the financial situation and the implementation of the budget consolidation strategy will bring fruit and constitute a serious contribution to reinforcing confidence in the Portuguese economy and its capacity to meets its objectives," he said.

"The government will take all measures -- I repeat all measures -- that may be necessary to reinforce confidence in the economy and guarantee that Portugal meets its commitments to reduce the deficit and contain public debt."

The government has imposed a four-year freeze on civil servants' pay, it is also planning to privatise several state-owned companies to add 6.0 billion euros (8.0 billion dollars) to its revenues, including 1.2 billion this year.

Lisbon has projected that public debt would reach 142 billion euros, or 86 percent of gross domestic product this year.

The country has seen a series of strikes in recent months against the government's spending cuts with parliamentary workers walking off the job on Wednesday for the first time since democracy came to the country in 1974.

"Speculative attack"

Portugal has been seen by some investors as the next weak link in the euro zone after Greece, and its bonds slumped this week as Standard & Poor's cut Portugal's credit rating by two notches.

Socrates also said the Iberian country's recent economic indicators and budget execution data were soothing and a sell-off of Portuguese assets this week was a purely "speculative attack" on sovereign debt and on the euro.

"Nothing justifies the market turbulence because the recent data, be it on the budgetary front, be it in the economic sphere are soothing," Socrates said. After hitting euro-lifetime highs on Wednesday, Portuguese bond spreads have retreated, but are still about double the levels seen in March.

He also said the attack on the common currency required a clear response by the European Union to guarantee the euro's solidity.


Agencies

Last Mod: 30 Nisan 2010, 16:00
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