Ratings agency Moody’s today joined the growing pressure on Portugal to seek an EU credit line when exiting its multibillion-euro bailout program in May.
Praising the country for bringing its 2013 budget deficit down to “significantly” below the troika-set target, Moody’s stressed nonetheless that the country could “gain more” by asking Brussels for a precautionary line of credit – particularly as this would help the country attain a sustainable level of economic growth.
The news comes less than a week after economy minister Pires de Lima said Portugal could well make a clean exit from its three-year bailout, just like Ireland.
But many disagree, saying Portugal isn’t anything like Ireland.
Speaking at the recent World Economic Forum in Davos, Nicholas Spiro of Spiro Sovereign Strategy said: “The reality is that Portugal is not Ireland — and even Ireland will struggle to stand on its own two feet.
“Ireland can just about get away without a safety net, but Portugal almost certainly can’t. Yet by deciding against applying for a credit line, Dublin has made things even more politically difficult for Lisbon. There’s now even more stigma attached to a post-bailout precautionary program.”
Joining the growing pressure on Portugal’s decision-makers, Moody’s say that whatever the case, the country needn’t make any decisions until “very close to the end of the program for financial assistance in 2014”.
