Socrates defends robustness of Portugal's economy - Summary

Mon, 22 Nov 2010

Lisbon/Madrid - Portuguese Prime Minister Jose Socrates on Monday defended the robustness of his country's economy, saying its problems were smaller than those of many other European countries and had "no relation" with Ireland.

European Union finance ministers announced on Sunday that Dublin had applied for financial aid from the International Monetary Fund and from the rescue mechanisms EU set in place in May after the bailout of Greece, the first such bailout in the eurozone.

There has been concern that Portugal and Spain might need similar assistance.

Socrates said he hoped the aid measures for Ireland would "normalize" markets and prevent the Irish problems from affecting Portugal.

Portugal's financial system turned out one of the strongest during the economic crisis in 2008 and 2009, Socrates said.

Portugal also had no property bubble, and its public debt was in line with the EU average, the premier pointed out.

Portugal's expected 2010 public deficit of 7.3 per cent was below those of France or Britain, and an austerity budget which has been given the green light by parliament will reduce it to 4.6 per cent in 2011, Socrates said.

On Wednesday, the government is facing a general strike over the austerity budget which cuts public sector wages, freezes pensions and raises value added tax.

Finance Minister Fernando Teixeira dos Santos has also stressed the differences between Ireland and Portugal, which he said had a "modern, sophisticated, well regulated and supervised, resilient and well capitalized banking system."

Portuguese economist Antonio Nogueira Leite warned, however, that the Irish bailout would only calm markets in the short term and would not eliminate Portugal's woes.

Meanwhile in neighboring Spain, Prime Minister Jose Luis Rodriguez Zapatero stressed the differences between Spain and Ireland.

Stress tests had proven the solidity of the Spanish banking sector, Zapatero's Socialist Party's organizational secretary Marcelino Iglesias quoted the premier as saying.

Spain's debt was below the European average, and the public deficit - of 11.1 per cent - would be reduced through austerity measures over the next few years, according to Zapatero.

In Brussels, a spokesman for EU economy commissioner Olli Rehn also ruled out the risk of a wider fallout from Ireland.

"There are no analogies to be made, the Irish case is very specific," Amadeu Altafaj told reporters.

"The decisions concerning Ireland are also meant to stop any possible tension and contagion to other economies," he added.

Source: Earth Times.
Link: http://www.earthtimes.org/articles/news/354697,portugals-economy-summary.html.