Portugal PM vows "all measures" on austerity goals

LISBON (BestGrowthStock) – 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.

Socrates told parliament his discussions on austerity strategy with the leader of the main opposition party, the center-right PSD, were of great importance and opened a new phase of constructive political dialogue.

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.”

Portugal’s Brussels-approved austerity program calls for slashing the budget deficit to 2.8 percent of gross domestic product in 2013 from last year’s 9.4 percent.

Still, asked by deputies whether the government was considering ditching or delaying major infrastructure projects like a high-speed train link to Spain that involve public investments, Socrates said the projects were important for growth and will go on.

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.

Investing Research

(Reporting by Andrei Khalip and Sergio Goncalves; editing by Stephen Nisbet)

Portugal PM vows “all measures” on austerity goals