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No reason to talk of Portugal default: EU’s Barroso

European Commission president Jose Manuel Barroso said on Friday there was no reason to speak of a possible Portuguese default, in the wake of market fears about the country’s financial health.

“Portugal is applying its assistance successfully and with the approval of its international partners,” said Barroso.

“There is no objective reason to talk of a default or to feed catastrophe scenarios,” Barroso, Portugal’s former prime minister said in Lisbon.

“I am convinced, as president of the European Commission but also as a Portuguese citizen, that Portugal will succeed in overcoming its difficulties,” he told a meeting of industrialists.

Portugal became the third European Union member state — after Greece and Ireland — to seek international aid when it received a loan of 78 billion euros ($103 billion) from the EU and the International Monetary Fund last May.

In return it agreed to sell-offs of public companies and labour reforms including less holiday time, which provoked protests in several cities.

On January 13, ratings agency Standard & Poor’s cut Portugal’s credit worthiness to below investment grade.

The centre-right government last month signed agreements with employment and labour leaders which officials said would result in growth, competition and jobs.

The EU/IMF loan is being paid over a three-year period, subject to Portugal’s implementation of reforms.

But investors and analysts have in recent days expressed growing concern that the country will not be able to meet its repayments and, as Greece has had to do, will ask to renegotiate its debt burden.

Portugal Prime Minister Pedro Passos Coelho dismissed such fears in an interview published Friday.

“If we manage to attain our debt and deficit objectives and balance our trade figures, there is no reason for the markets to suppose that Portugal will have to renegotiate its programme,” he said.