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Debt fears after Portugal austerity vote

Wednesday, November 11, 2015 - 01:40

Portugal's centre-right coalition has been ousted by left-wing parties in a crucial parliament vote against austerity. As Ivor Bennett reports, there are now fears the country's debt rating could be downgraded, locking it out of the ECB's bond-buying programme

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Nervous times for Portugal after left-wing parties ousted the ruling centre-right. They lost the recent election but have now won what was effectively a vote of no confidence in those who did win. (SOUNDBITE) (Portuguese) AIR CONDITIONER TECHNICIAN, BENTO, SAYING: "I don't think it's very fair that a party that has lost gets to form a government." (SOUNDBITE) (Portuguese) ADMINISTRATIVE WORKER, MARIA RODRIGUES, SAYING: "Promises, promises but when you owe, you need to pay, so I don't think this will be a solution," Portugal exited its international bailout last year but it still owes plenty. And there are fears the political uncertainty could lead to a ratings downgrade, meaning the ECB won't be able to buy its debt. Joao Pereira Leite from Carregosa Bank hopes a promise from the Socialists will prevent that. (SOUNDBITE) (English) CARREGOSA BANK INVESTMENTS DIRECTOR, JOAO PEREIRA LEITE, SAYING: "The new possible government in place has already said that they are committed to the budget limits and they target 2.8 percent for next year. So in principle, they are in line. How they are going to get there and if the European partners accept that, that's a question mark." Some fear the vote has put Portugal on a similar path to Greece. It's certainly a rejection of austerity, a familiar theme says IG's Alastair McCaig. SOUNDBITE (English) ALASTAIR MCCAIG, MARKET ANALYST, IG, SAYING: "I think the extensive debates that we've had in regards to Greece have highlighted how the over-burden of austerity measures can see the economy crumble." Portugal's bond yields recovered a little after a rise on Tuesday - largely due to the prospect of ECB stimulus for the whole of the euro zone. But politically there are lots of unknowns. The Socialists could be asked to form a government or there could be a new election with all the uncertainty markets hate.

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Debt fears after Portugal austerity vote

Wednesday, November 11, 2015 - 01:40