BRUSSELS (MNI) – Portugal’s additional budget measures are adequate
for this year but the country may need to take additional steps to
ensure it meets its targets in 2011, European Commissioner for Economic
and Monetary Affairs, Olli Rehn said on Tuesday.
Portugal’s high debt and deficit levels are a crucial market
concern as traders speculate that the country could default on its
debts. In a bid to shore up market confidence in all the Eurozone
economies, Euro-sharing governments set up a E440 billion backstop fund
and agreed that Portugal and Spain would implement more measures to cut
their deficits.
“My assessment of Portugal is that the new budget targets are
appropriate and ambitious [and] will lead to fiscal consolidation of
about 6% of GDP,” Rehn told reporters at press conference after a
meeting of finance ministers here on Tuesday.
He said the measures for this year were fine, but that more
measures could be needed for next year.
Credit ratings agency Moody’s lowered Portugal’s sovereign debt
rating on Tuesday to A1 from the maximum AA2, saying the country’s
public finances were set to worsen and that growth prospects are weak.
Rehn wouldn’t comment on that ratings decision but he said he
thought the three main credit ratings agencies had a pack mentality and
just followed each other.
“The credit ratings agencies often have a tendency to amplify the
trends rather than foresee them,” he said.
EU officials think that the three largest credit ratings agencies
have too much power in the markets and are currently working on plans to
rein them in.
European Central Bank President Jean-Claude Trichet said in a
French newspaper interview published Tuesday that it was “probably
advisable to put an end to the global oligopoly of three agencies.”
–Brussels: 0032 487 (0) 32 803 665, echarlton@marketnews.com
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