Debt Denial in Portugal
They followed Greece by taking a bailout, but Portugal’s new leaders are determined that’s as far as they go along the same path.
The country’s new leader Passos Coelho signed a coalition agreement on Wednesday and was appointed Prime Minister.
He said he was determined to avoid a Greek-style crisis and promised to return to the debt markets before the 2013 deadline set by the EU and IMF.
“The PSD and the CDS-PP have agreed on a future government that will be an example to the country, and that will regain the confidence of the Portuguese people and the markets in Portugal.”
Investors have dumped Portuguese assets this year as many fear the country will follow Greece.
Coelho called his task is “truly gigantic” but he and his coalition partner Paulo Portas say they’re up to the challenge.
As Portas explains:
“If we govern for the next generations and not for the next elections, and make this the last time such an old nation with such a big history has to request external aid, I think we will fulfil our duty to the Portuguese and Portugal.”
But they’ll have to increase taxes, drastically cut spending and delay structural reforms to comply with the terms of their 78 billion euro bailout.
And the Portuguese could yet find that as hard to swallow as the Greeks have.
Bottom line: Portugal’s new coalition government has vowed to do everything possible to return to the debt markets before a 2013 deadline set by the EU/IMF.