Brussels, 01/02/2012 (Agence Europe) - On Wednesday 1 February, Portugal rolled over €1.5 billion of three and six-month sovereign debt at lower rates than the most recent similar emission. There are still doubts, however, about the country's ability to roll over its long-term debt next year because the introduction of an austerity programme has plunged the country into deep recession, with the economy expected to shrink by 3% in 2012. Following a new downgrading of the country's debt by US credit rating agency Standard and Poor's, interest rates have shot up to above 17% for 10-year bonds and even more for medium-term loans. This also reflects investors' fears of a re-run of the Greek situation in Portugal, although Europe's leaders say that Greece, which is currently negotiating a second bailout, is a one-off in the eurozone.
The Portuguese government says it will meet the budget and macroeconomic targets set out in the austerity programme it has pledged to implement in return for financial aid of €78 billion. The Portuguese prime minister, Pedro Passos, said that anyone who wants to do what has been agreed does not start saying he wants to renegotiate or wants more time or more money. Portugal will do what is necessary, cost what it may. It has an enormous cost, he said, but the country would do it anyway. (MB/transl.fl)