As the days countdown to Monday, November 9 – when the PSD minority government is due to present its next four-year programme – ratings agency DBRS has warned that Portugal could easily return to the much-maligned “rubbish category”.
Jornal de Negócios online explains: “The threat is real: Portugal’s rating could return to ‘rubbish’.”
But the truth is that DBRS is the only ratings agency of the big four (Moody’s, S&P and Fitch) that doesn’t already classify Portugal’s debt as “rubbish”.
True, hopes expressed by all are that the tide was at last turning and a new government could signify new structural reforms – but any decision by DBRS to reduce its rating could have a negative effect on the ECB’s purchasing of Portuguese debt, company analyst Adriana Alvarado has told RTP.
As to the ongoing negotiations among left-wing parties – seemingly intent to bring the government down next week – Alvarado said: “We would be worried with any agreement that could lead to a weakening of political zeal in relation to budgetary adjustment and prudence in general.”
Drawing what Negócios Online called “a red line”, Alvarado added: “We would be worried if structural reforms were reversed.”
It was yet another “interview with experts” expounding on Portugal’s political future which today, a full calendar month on from the country’s elections, is still a very unknown quantity.
As Alvarado told RTP, if a new government was “really committed to the eurozone, it would have to adopt an economically credible programme which guarantees the reduction in public debt”.
The opinion has to be set against the reality that four years into Portugal’s austerity programme, the country’s has skyrocketed and is now the third worst in the EU.
According to the latest figures from Eurostat, Portugal’s deficit also is classified as the EU’s second highest.