Fitch affirms Portugal credit rating

7th October 2011, Comments 0 comments

Fitch ratings agency said Friday that it affirmed its BBB- credit rating on Portugal, bailed out earlier this year, but left the country on a negative outlook, meaning it could be lowered in the future.

Fitch said it would review the ratings outlook this quarter, taking into account "official lending terms, Portugal's performance to date under the EU-IMF programme, the 2012 budget, progress towards privatisation, risks to Portugal's banking system and an updated assessment of Portugal's medium-term economic and fiscal prospects."

Fitch separately downgraded Spain and Italy by one notch on Friday, citing the growing pressure on them from the eurozone debt crisis.

Earlier in the week, Standard and Poor's, another of the top three ratings agencies, also affirmed its credit ratings on Portugal, with the outlook remaining negative.

S&P said Portugal was "strongly committed" to its EU-IMF debt rescue programme and the tough fiscal targets set, which it should be able to get close to -- by introducing additional austerity measures if need be.

In also warned that Portuguese economy "is likely to contract in the near term more severely than we previously expected due to weaker external demand and tighter credit conditions."

Centre-right Prime Minister Pedro Passos Coelho, who came to office in June, has promised to broaden economic reforms in Portugal, the third country to have received a bailout by the EU and IMF after Greece and Ireland.

Portugal has already passed a wave of reforms including a hike in transport prices, increased taxes on gas and electricity and cutbacks in the public work force.

In July, ratings agency Moody's slashed Portugal by four notches.

© 2011 AFP

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