Rat­ing agency rules out new Por­tu­gal bailout

The Myanmar Times - - International Business -

POR­TU­GAL aims to sharply re­duce its pub­lic deficit in 2017 mak­ing it un­likely to need a se­cond in­ter­na­tional bailout in the fore­see­able fu­ture, Cana­dian credit rat­ing agency DBRS said.

The coun­try was res­cued by a 78 bil­lion euro bailout from the Euro­pean Union and the In­ter­na­tional Mone­tary Fund in 2011, a process that in­volved steep spend­ing cuts and painful re­forms.

It ex­ited the bailout in 2014 with­out the need for fur­ther fi­nanc­ing, but its eco­nomic growth is still weak and a left-wing gov­ern­ment which took of­fice last year has re­versed some aus­ter­ity mea­sures, rais­ing mar­ket con­cerns over the coun­try’s fi­nances.

Asked if a new bailout for Por­tu­gal is likely in the near or dis­tant fu­ture, DBRS co-head of sov­er­eign rat­ings Ni­chola James said, “No, the fis­cal flow met­rics are im­prov­ing.”

She pointed out that the gov­ern­ment en­vis­ages a 0.6 per­cent­age point re­duc­tion in the struc­tural deficit – which ex­cludes the ef­fects of the busi­ness cy­cle and one-off items – next year as re­quired by the Euro­pean Union.

DBRS main­tained its rat­ing of Por­tuguese debt at in­vest­ment grade level, a move which means the na­tion’s debt can still be pur­chased by the Euro­pean Cen­tral Bank’s bond-buy­ing pro­gram.

But DBRS warned that the rat­ing could be down­graded if there is “a de­te­ri­o­ra­tion in pub­lic debt dy­nam­ics, re­sult­ing from markedly lower growth or a pro­longed pe­riod of el­e­vated in­ter­est rates”. –

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