Brussels, 01/04/2011 (Agence Europe) -Portugal was granted some breathing space by the markets on Friday 1st April 2011 when it managed to roll over €1.6 billion of debt for 5.8%, a lower rate than experts had predicted. The Portuguese president, Anibal Cavaco Silva, announced on the same day the holding of general elections on Sunday 5 June.
From now until June, Portugal will need to roll over more than €9 billion in further debt (€4.2bn in April and €5bn in June), but the markets are concerned about its ability to honour its debts. New bonds are expected to be issued, the next one for Wednesday, to raise nearly €7bn over the short-term (Q211).
Highly indebted and in recession in 2011, Portugal says it will not need to ask for international aid. Last week, the minority socialist government headed by José Sócrates lost a vote of confidence over its austerity measures (see EUROPE 10345). The outgoing government would not have the legitimacy or power to negotiate any type of deal before the new elections, explained the finance minister, Fernando Teixeira dos Santos, on Friday.
The Portuguese Finance Institute has announced that the country's economy is in worse straits than expected. The public deficit is expected to reach 8.6% of gross national product in 2010 rather than 6.8% as forecast by the government in the past. The debt reduction objective agreed with the EU is 7.3%. Banks have required new bailouts and greater public spending has sapped public finances. Teixeira dos Santos says that the bad budget figures have not altered the deficit reduction targets in any way (to 4.6% of GDP in 2011, 3% in 2012 and 2% in 2013).
A spokesperson for EU Economic and Monetary Affairs Commissioner Olli Rehn said on Friday that the Portuguese government had submitted the new figures to the EU's statistical office, EUROSTAT, and had been honest about the statistics which reflected application of the EU rules. Refusing to comment on whether the caretaker government would be able to request financial aid, the spokesperson simply stated that the European Commission had not received any official request. (M.B./transl.fl)