Fears over Portugal’s sovereign debt continues to plague markets after the Standard & Poor’s agency cut the country’s credit rating.
Stocks have plummeted in recent days while yields on Portuguese bonds have shot up, indicating the markets are unconvinced by government plans to trim the public deficit.
Finance Minister Fernando Teixeira dos Santos defended his planned austerity measures, denouncing what he called “an attack from the markets” and rejecting comparisons with Greece.
Santos plans to freeze public sector pay and privatise state-owned companies in a bid to swell the government coffers.
Portugal’s public deficit rose to a record 9.4 percent of GDP last year with a sovereign debt of 126 billion euros, some 76.6 percent of GDP.
Government officials project the sovereign debt to climb to 142 billion euros by the end of this year.
Investors have expressed fears that unless its finances can be restored to full health Portugal will follow Greece in seeking assistance from the International Monetary Fund and the European Union.