Lisbon, Portugal - Portugal is inflexible, there no need international rescue plan to fix its problems of debt, but he now faces an auction of bond on Wednesday that could reveal the price to go to the same impetus to financial crisis in Europe.
Portugal is one of the smaller members and frailest 17-nation euro zone after the Greece and Ireland, which last year had massive subsidies to their partners of the European Union and the Monetary Fund International.
Investors have identified the countries debt as the next potential crisis victim and pushed its borrowing costs at sustainable levels barely requiring premiums higher for the loan of money.
Market tensions have eased slightly after Japan said he would help to finance a portion of Europe, rescue efforts that echo its commitment by China, but the situation remains dire.
Portuguese Prime Minister José Socrates sought to calm the nerves frayed Tuesday with his Government, which has introduced a package of austerity of pay cuts and tax hikes, made progress in reducing its budgetary deficit. Preliminary data indicate that deficit than last year would be less than the objective of the Government of 7.3%.
"The Government is doing its job and do", Socrates said at a press conference. "I wish to emphasize once again that...". Portugal seeks no financial assistance for the simple reason that there no need for it. »
But reports say the Germany and France, two major financial Europe grow in Lisbon to accept assistance to verify the debt crisis spreading to improperly further major countries that would be much more expensive to save. Portugal, such as the Greece and the Ireland represents only about 2% of GDP in the euro area.
Analysts estimate Portugal would require a rescue plan for euro50 billion to euro100 billion ($ 65 $ 130 billion). A rescue for the Spain operation is several times larger.
Finance Minister Fernando Teixeira dos Santos vented frustration with a lack of help from other European nations to keep the Portugal to take financial assistance. Repositioned come with strings attached - more painful austerity - which erode sovereign capacity countries to control its budget policy.
"We are doing our job." Obviously, Europe does not work to defend the stability of the euro, "he told radio TSF." It was not specified.
In the euro area, the European Central Bank has endorsed the main task of the stabilization of markets by quietly buying bonds more indebted countries of Europe, such as Portugal, Ireland and Greece, on the capital markets. Bond purchase supports their prices and reduces the performance of obligations.
But more help is from outside the region.
Japan is committed to fund approximately one fifth of the next European Rescue Fund bond issue which is estimated to about 5 billion ($6.5 billion).
China had promised earlier help Portugal, like the Greece and the Spain, he supported by buying their debt. While details have not been released, reports suggest China is ready to invest at least euro4 billion.
Analysts say that Asian countries are probably interested in yields higher in Europe as well as stabilization of global markets between partners commercial key. China, which has long vilified by the United States and Europe to keep its low currency to boost exports, can be the search for political goodwill.
The extent of the problems of the Portugal market will become more clear on Wednesday, when the Government auctioning off the coast of bonds of 3 and 9 years. Request of poor or high painful at the auction interest rates would further strain on the financial difficulties of the continent.
Analysts believe Portugal raise money, but at a heavy price.
"They can exploit the market... but in terms of a more average perspective and in light of what it means for the country's debt Outlook and that a greater amount of money is required to service this debt... This isn't a real reason for comfort," said Michael Leister, an analyst with fixed income to WestLB commercial bank in Düsseldorf, Germany. ""
The Portuguese bond yields of 10 years, a telling test of the investor sentiment has recently reached a record of over 7% euro-ère compared to about 3% for the eurozone powerhouse Germany. This level of interest on loans is not far rates that finally forced the Greece and Ireland to concede defeat after months of rejecting a rescue.
New data deficit and the promise of the Japan in support of European debt Portugal 10 year bond yield has contributed assisted refuse 6.87%.
Among other heavily indebted countries, Italy also saw his ascent of yields, but has no problem of selling euro7 billion in obligations of 12 months offered Tuesday.
More worrying are the Belgium, the level of debt of 98.6% of GDP in 2010 would be the third most high EU behind the Spain and the Italy and the Greece, which is nearly two years of recession. Madrid is organizing an auction of bond Thursday.
The Greece raised euro1.95 billion in the auction of Treasury bonds Tuesday, easing concerns a day after his success in bond yields a record.
Socrates, Portuguese Prime Minister, said his deficit cuts are among the sharpest in the eurozone 17-nation and that the Government could bring down the deficit to 4.6% this year. 9.3% Portugal 2009 deficit was the fourth most high in the euro area.
However, much of the reduction of the deficit last year was attributable to tax increases and one-off factors while expenditure continued to grow, albeit at a slower pace.
Prospects are not brilliant. In a report, the Portugal Bank said Tuesday that he expected the economy sank into recession, the next year by austerity measures. Its forecast of a 1.3% contraction are roughly analysts expectations.
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Pan Pylas London, Menelaos Hadjicostis in Cyprus and Derek Gatopoulos Athens has contributed to this story.
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