Barroso Slams Portugal Credit Downgrade

Posted July 6th, 2011 at 11:35 am (UTC-5)
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European Commission President Jose Barroso says he deeply regrets Tuesday's decision by Moody's Investors Service to downgrade Portugal's credit rating. Two months ago, Portugal received an aid package worth more than $100 billion, but Moody's says it thinks Portugal will need a second bail out.

Speaking in Strasbourg Wednesday, Barroso said Portugal has begun an adjustment program and it is up to the European Commission, the European Central Bank, and the International Monetary Fund to make sure the country fulfills its requirements.

Portugal's Finance Minister Vítor Gaspar said Tuesday Moody's had not taken into account the new austerity measures or the political support in Portugal for fiscal discipline.

Portugal accounts for less than two percent of the eurozone's gross domestic product. But its economic resilience is seen as crucial to the eurozone and the strength of the euro.

It joins Greece, Ireland, and Spain, in struggling with major sovereign debts.

Portugal's borrowing rates jumped higher and stocks slumped Wednesday. Spain and Italy were dragged into the downturn, adding new momentum to Europe's sovereign debt crisis.