We don't need help says Portuguese President.jpg

We don’t need help says Portuguese President

By CHRIS GRAEME [email protected]

Portuguese President Aníbal Cavaco Silva affirmed over the weekend that he did not believe Portugal needed to go cap-in-hand to the International Monetary Fund (IMF).

The statement was made after it was announced that the Irish Government would formalise negotiations for a €700 billion bailout fund to save the country’s banking system from financial collapse.

Speaking on Sunday following the historic NATO summit over the weekend, Cavaco Silva said he hoped that it would “not be necessary to seek external financial help” and added that he had, during the summit, explained to the President of the United States that Portugal’s situation was very different from that of Ireland and Greece.

Quoted by the Portuguese news agency Lusa, Cavaco Silva had “explained very well” to President Barack Obama the differences.

“Portugal does not have any systemic crisis within its banking system” like Ireland, did “not suffer from a property speculation bubble”, like Ireland, the United Kingdom and Spain, while Portugal’s public debt level was “in line with the European Union average,” he said.

The Portuguese Ministry of Finance sent out a press release to the media, including the Algarve Resident over the weekend, in which it was made clear that the Government had a clear strategy to reduce its budget deficit and reforms to boost economic growth.

In a bid to calm international market jitters that Portugal would need an IMF bailout following Ireland’s emergency rescue package, the Ministry stated that its banking system was “resilient and well-capitalised”.

And on Sunday night, Prime Minister José Sócrates told reporters that Portugal did not need a bailout but rather needed to get the State Budget for 2011 approved and continue its austerity measures.

Analysts both in Portugal and the United Kingdom have been weighing up the odds of the market turbulence contagion spreading to peripheral Eurozone countries like Portugal, Spain and Italy. 

The issue of whether Portugal will need to access IMF funds has divided economists and financial figures on the right and left of the political spectrum.

In an interview earlier this month with RTP1’s Judite de Sousa, banker and Banco Espírito Santo president Ricardo Salgado said he didn’t believe “Portugal should or would seek outside help”.

Out of control

But opposition PSD party economist António Nogueira Leite said in an interview with Público on Monday that Portugal would only escape IMF intervention if it started behaving in a way that up until now it hadn’t managed to do.

The Director of the José de Mello Group, who this week published a book called A Portuguese Tragedy, said that the Government needed to “fulfil what it had promised” and needed to “clarify a budgetary overspend for 2010 which (had) yet to be adequately explained”.

“What we’ve got now is a Government that is absolutely out of control in terms of expenditure and a (finance) minister on a permanent road show giving excuses,” he said.

It was a sentiment echoed in the Financial Times this week when Barclays Capital stated that the “markets had more questions than answers at the moment”.

As if to reflect these concerns at fuzzy clarifications and contradictory statements on an almost daily basis, interest rates on Portuguese 10-year sovereign bonds shot up two basis points to 6.53 per cent.

Over the weekend, Finance Minister Fernando Teixeira dos Santos, who recently warned Portugal was heading for a bailout, said that Ireland’s decision, albeit with an EU gun at its head, to accept IMF help, would “reduce uncertainty and increase market confidence”.Do you have a view on this story? Please email Editor Inês Lopes at [email protected]