Standard and Poor's pessimistic on Portugal
Ratings agency Standard and Poor's on Monday lowered its long-term credit assessment of Portugal to "negative" from "stable," voicing pessimism on the country's capacity to strengthen its public finances and reduce debt.
The agency maintained its A-plus rating on Portugal's long-term debt and its A-1 rating on short-term debt.
But S&P warned that its ratings could be lowered next year if deficits remained high and economic growth lacklustre.
The agency said Portugal's public deficit could be higher than the 8.0 percent of output foreseen this year, with its debt-to-gross domestic product ratio possibly hitting 90 percent or more by 2011 after 66 percent in 2008.
It added that trimming the budget would likely be complicated by structural weaknesses in the economy and weak competitiveness that would hamper growth.
The agency said the economy was likely to show a 2.9 percent contraction this year and stagnate in 2010.
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