Minister says Portugal could be pushed out of euro
A large euro sign installation is seen in front of the European Central bank (ECB) headquarters prior to the monthly news conference of ECB President Jean-Claude Trichet in Frankfurt, November 4, 2010.
Credit: Reuters/Kai Pfaffenbach
LISBON |
LISBON (Reuters) - Failure to adopt a broad coalition government to deal with the financial crisis could result in Portugal being forced to abandon the euro currency, its foreign minister said in an interview published on Saturday.
The opposition and government must come together to deal with an "extreme situation," Luis Amado told the weekly Expresso.
Portugal saw a sharp loss of investor confidence in the past few weeks as concerns over fellow euro zone weakling Ireland intensified over its budget, pushing Portugal's risk premiums to their highest levels since it adopted the euro.
"The country needs a grand coalition that allows it to get through the current situation," Amado told the weekly.
"I believe that the (political) parties understand that the alternative to the situation we confront is eventually leaving the euro," he said. "That is a situation that could inevitably be forced on us by markets to consider."
Much of the concern over Portugal's efforts to cut its budget deficit in the past few weeks came from doubts over whether the opposition Social Democrats would support the austere 2011 budget in parliament.
The Socialist government rules without a majority in parliament and needs support from the opposition to pass legislation.
The Socialists and Social Democrats finally reached an agreement leading to approval of the 2011 budget at its first reading in parliament this month, but investors are watching closely until the final vote on November 24.
Analysts have said they doubt the Socialists will last through their term which ends in 2013, especially now that the Social Democrats lead in opinion polls, but under Portugal's constitution snap elections cannot be held before May.
(Reporting by Axel Bugge; Editing by Peter Graff)
- Tweet this
- Link this
- Share this
- Digg this
- Reprints
The macroeconomic indicators of this nation are not that different from those of some of the big ones in Europe(look at the UK, or France for instance, with their high deficits and public debts) and it’s really difficult to understand why is it that the markets prefer to attack the smallest, unless we really just accept and face reality: because it’s much easier for them. The word of an English-speaking news reporter or Angela Merkel is worth 50,000 words coming out of Portugal’s PM mouth.
It saddens me again that the markets are doing this , they forget that the Portuguese, the Spanish, the Irish are people, not dollar bills, and their behaviour shows how indifferent the markets are to that. So much for self-regulation if that means people getting poorer and countries going bankrupt due to speculation. This is a difficult debate for me because when I read a news article like this it makes me feel that the person who wrote it thinks that countries are like financial institutions instead of countries where PEOPLE live in.
And it’s somewhat funny (not funny in the good way) that they have two different weights and measures for different countries, I mean looking at macroeconomic prospects around western europe, and seriously this is fact backed by numbers Portugal and Spain’s situations aren’t really that different from those of the UK or France for instace, so why do rating agencies downgrade Portugal and Spain, due to its macroeconomic outlook… and not the UK (or France) then? Why does the UK get a prim AAA rating? (look at the numbers I am talking of FACT here) There’s a twisted logic in all this, especially when taking into account that portugal,spain, ets are among the poorest in the Eurozone in terms of per capita income… shouldn’t they be helped by the markets instead of having to take measures to hamper its economic growth?
There are many questions that seem to have little to no answer in reasonable terms. But one fact is certain, the markets are being wreckless with Portugal, Spain, etc., it is all mostly speculation and making profit, and I don’t really know where this will lead. It is indeed a sad world we live in . This article contributes to this. Thank you.
Follow Reuters