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Portugal says DBRS rating proves gov't path to promote economic recovery correct

Xinhua, October 22, 2016 Adjust font size:

The decision of Canadian rating agency DBRS to maintain Portugal's public debt rating proves that the path drawn by the Portuguese government to promote economic recovery is correct, Portugal's ministry of finance said in a statement on Friday.

"The Ministry of Finance has been advocating that there is a sustained improvement in confidence, internally and externally, confirmed once more by the confidence indicators released this week by INE (National Institute of Statistics)," the note reads.

"Fiscal Consolidation in a context of growth and social cohesion is possible and desirable," the statement adds.

DBRS, the last of major raters to keep Portugal at investment grade, announced its decision to hold its investment grade rating Friday. It has maintained the country at investment grade, BBB.

This is important news for the country because it means the country's debt is eligible for the European Central Bank's bond buying program. The country needed at least one investment-grade rating to qualify for the ECB stimulus plan.

"The rating reflects Portugal's euro zone membership and its adherence to the EU economic governance framework, which helps foster credible macroeconomic policies," DBRS said.

"However, Portugal faces significant challenges, including elevated levels of public sector debt, low potential growth, ongoing fiscal pressures, and high corporate sector indebtedness."

Portuguese Finance Minister Mario Centeno revealed last Friday the country's state budget for 2017 which forecasts a deficit of 1.6 percent of GDP next year and growth of 1.5 percent.

Portugal's Socialist Party took office in November and vowed to roll back austerity, reversing salary cuts and raising pensions, while increasing indirect taxes in oder to cut the deficit target.

"The credit given today to the effort of workers and enterprises to put Portugal on a sustainable growth trajectory must be translated into a more positive assessment. The country's commitment to honour its responsibilities inalienable," the ministry of finance said. Endit