The ratings agency Moody’s needs to have more certainty that the current growth in Portugual’s GDP is sustainable, as it is mostly based on exports, but is not bothered if the exit from the Troika programme is a clean one or accompanied by a further credit facility.
Kathrin Muehlbronner, Vice president and senior analyst at Moody's, commented today that Portugal already is raising money on the international debt market but still "growth prospects and debt levels remain a concern." The agency predicts a stabilisation and a return to moderate growth for Portugal’s economy.
Muehlbronner said that "Portugal and other bailout countries have done much in terms of structural reform and this should lead to higher growth in the future. The question is when and to what extent?”
“But there is still much to do. As the IMF has warned, fiscal consolidation must continue for many, many years," says the analyst who also rejected making "recommendations to the Government."
As to whether Moody’s would revise Portugal’s rating upwards, or at least think about it, Muehlbronner said that “the rating rose to 'stable' in November 2013 which was a significant first step"
Moody's next revision of hold notice will be announced on 9 May, "we will analyse the trends at that time."
To consolidate the situation of Portugal in the debt market Moody's would not be drawn on whether an agreement between the three major political parties would speed things up but commented that it "depends on what kind of deal this would be. I would say that a commitment by all parties to maintain fiscal consolidation and maintain key areas of the Troika programme would certainly be something positive."
This question was not as random as it may appear as the Troika has forwarded a suggestion to Portugal’s political leaders suggesting that a fast-track way out of the current austerity programme by showing international lenders a united front would be if the Portuguese coalition government came to a broad understanding with the Socialist Party.
After the conclusion today of the 11th Troika review of the Portuguese adjustment programme, João Vieira Lopes from Portugal's Confederation of Commerce commented that this time the Troika has gone too far and always displayed an “arrogant attitude.”
Unions said this afternoon that the Troika’s insistence on the idea of further pay cuts was nonsense and that it is more important to reduce the tax burden on families and businesses.
The Troika review concluded the merits of the adjustment program, but continued to insist on the continuation of austerity measures with an emphasis on further pay cuts.
