Lisbon not seeking changes to bailout terms
PORTUGAL signalled yesterday it had no intention of requesting changes to the terms of its €78bn bailout, arguing that sticking to the plan was the only way to win credibility.
The economy minister, Alvaro Santos Pereira, said the country's strong commitment to the bailout terms has boosted its credibility and helped reduce its bond yields.
Portugal's stance contrasts with Greece, which has repeatedly requested changes to its bailout, and Ireland, which has suggested it could request easier terms if Spain wins improved conditions for a bailout for its banks. Portugal was the third eurozone country to receive a full bailout after Greece and Ireland.
"I believe we have to maintain the strategy we have, to implement and deepen structural reforms so that we can grow and continue to gain credibility as we have done in the past few months," Mr Santos Pereira said.
"That is why we have made such great efforts to fully meet the memorandum of understanding and we intend to continue to meet it."
Portugal's single-minded reform drive in the past few months has rewarded the country with falling bond yields. Ten-year bond yields are currently at 9.8pc, sharply down from highs around 17pc at the beginning of the year, but still higher than Ireland's.
The yields are still too high for Portugal to be able to go back to the markets for funding, something Lisbon currently plans to do next year. Many economists believe Portugal will struggle to meet this year's budget goals and think more bailout funding will be needed.
Mr Santos Pereira also played down expectations for so-called euro bonds, which German Chancellor Angela Merkel appeared to rule out yesterday.
"We understand that the question of euro bonds is not on the negotiating table at this moment," he said.
Portugal has not joined Spain and Italy in demanding rapid action by the European Central Bank to help overcome the crisis.
Mr Santos Pereira repeated the centre-right government's stance that the country would do what it takes to regain credibility.
"What is external we cannot control, we have confidence in the authorities in other countries," the minister said.
"What we are doing is our homework so that we can return to growth as fast as possible."
Portugal has been susceptible to bouts of contagion and it remains the second-most risky country in the euro after Greece, in terms of bond spreads.
Lisbon's fulfilment of the terms of its bailout from the European Union and International Monetary Fund has been praised by Berlin and Brussels but Portugal is in its worst recession since the 1970s as the government slashes spending.
So far, Lisbon has met all budget goals under the bailout, which it sought last year, becoming the third country in the eurozone to get financial aid after Greece and Ireland. (Reuters)