The ratings agency Fitch stated today that Portugal will get access to financial markets next year, but the option of arranging a ‘precautionary’ line of credit with its lenders would make the country look more stable.
In this way Portugal should be able to avoid a second bailout and should also escape a full scale debt restructuring if by taking early precautions investor jitters are calmed.
Fitch has always said that Portugal will need more support from the Troika at the end of the current bailout period due to end next June, and that a precautionary program will improve investor confidence.
"Since the bailout programme's inception in 2011, the outlook from Fitch was that Portugal would need additional official support when the programme ended. Fitch understands that an extended credit line with conditions is the most likely scenario, or a precautionary credit line with conditions," stated the rating agency’s analysts.
This recommendation is in stark contrast with the government line that it will be able to go it alone next year, a bold assertion in the light of poor performances in budget reduction areas such as state employees and some departmental spending. Income from privatisations has been good with more planned for 2014 which will ease cash concerns.
