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Portugal caretaker government cannot negotiate aid: minister

Portugal’s caretaker government does not have the right to negotiate an international bailout for the country’s ailing economy, Finance Minister Fernando Teixeira dos Santos said Thursday.

“This government does not have the legitimacy, nor the conditions to negotiate in this way,” the minister told a press conference as Lisbon comes under increasing pressure from the markets to shore up its coffers.

Teixeira dos Santos was speaking after the release of official figures showing that Portugal’s public deficit stood at 8.6 percent of Gross Domestic Product last year, well above the 7.3 percent government objective.

He insisted, however, that the target for this year was “not in danger”.

The outgoing government, which fell after parliament refused to endorse another round of tough austerity cuts, pledged to bring down the budget deficit to 4.6 percent in 2011.

“The government is considering all the means to assure the country’s finances,” the finance minister said.

Since Prime Minister Jose Socrates tendered his resignation last week, the market pressure has heightened further.

The yield on Portuguese 10-year bonds rose above 8.0 percent on Wednesday for the first time since the country adopted the euro currency.

On Tuesday, Socrates said he was “very determined” to avoid the kind of EU-IMF bailout which fellow eurozone members Ireland and Greece sought last year to prevent a debt default.