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July 24 Moody's Investor Service raised
Portugal's government bond rating on Friday to "Ba1" from "Ba2",
on expectations that the country's fiscal consolidation will
remain on track.
Portugal's highest court in May struck down several budget
measures, including some public sector salary cuts, creating a
fiscal gap of about 700 million euros this year.
"The first driver behind the upgrade is Moody's view of the
government's strong commitment to fiscal consolidation, despite
repeated set-backs stemming from the adverse rulings of the
country's Constitutional Court," Moody's said on Friday. (bit.ly/1phcEXF)
The ratings agency also said it does not expect the issues
facing Banco Espirito Santo to have an effect on the
government's balance sheet.
Lisbon was forced to seek a bailout from the European Union
and the International Monetary Fund in 2011.
Portugal said in June it decided to forego the last payment
from its international bailout program after the country's
constitutional court rejected a series of austerity measures.
The country's economy started to recover last year, and bond
yields have fallen this year.
Portugal has undertaken several austerity and reform
measures since the European debt crisis that rocked global
The ratings agency assigned a stable outlook to the
government bonds but said that the country's high external debt
was a key credit weakness.
(Reporting By Narottam Medhora in Bangalore; Editing by Joyjeet