By Stephanie Bodoni
Luxembourg’s Jean-Claude Juncker, who leads the group of euro-area finance ministers, said Portugal’s situation is different from that of Ireland, which last week sought international aid, Belgian newspaper L’Echo reported.
“There are no parallels whatsoever between Ireland and Portugal,” Juncker said in an interview to be published in today’s edition. “The budgetary reform plan Portugal put on the table is quite consistent. And the banking sector shows signs of robustness.”
Portuguese bonds have dropped as the government struggles to convince investors it can avoid the fate of Ireland and Greece, which have asked for European Union bailouts this year. Portuguese Finance Minister Fernando Teixeira dos Santos said yesterday that governments can’t impose a bailout on his country after the Financial Times Deutschland reported that it’s being forced to seek aid
On the question of extending the European Financial Stability Facility, Juncker said that “even if some could see it as wise to prolong the existence of this mechanism, some member nations see that differently.” He said that he favours the creation of a permanent crisis mechanism.
Juncker also told the newspaper “it’s not correct to say” that bank stress tests conducted earlier this year on Europe’s financial institutions were “unconvincing.”
“What happened in Ireland is that the banks are not able anymore to manage the consequences of the bursting of the property bubble, which wasn’t a working hypothesis” in the last tests, said Juncker in the interview.
source: http://www.bloomberg.com
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