Here we go again

25 January 2012 By Fiona Maharg-Bravo, Neil Unmack Follow @unmack1

Will Portugal follow Greece into default? The country’s bonds are beaten-up, and the country is struggling to keep up with fiscal targets, but Lisbon won’t necessarily join Athens on the D-list straight away; a Portuguese debt haircut remains a political decision.

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Portugal’s prime minister Pedro Passos Coelho said on Jan. 25 that the European Union and International Monetary Fund stood ready to provide additional funds for the country if it was unable to return to market in 2013 for “external reasons”. Passos Coelho said the country’s bailout programme would not fail for “internal reasons”.
Portugal’s adjustment programme assumes the country will be able to raise 9.3 and 15.9 billion euros in 2013 and 2014.
Portugal cut its budget deficit to an estimated 4 percent of GDP last year, thanks in part to one-off transfers of banks’ pension funds to the state. Without the transfer, the deficit would have been 7.5 percent, above the programme target of 5.9 percent.

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