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Another negative for Portugal

Another negative for Portugal
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More bad news for Portugal, as the ratings agency Standard & Poor’s revised its sovereign credit outlook downward to negative from stable.

It said that was based on worries that political instability there may derail the country’s fragile economy and its ability to exit a 78 billion euro bailout next year.

That follows the resignations of the finance and foreign ministers, over austerity issues, though the prime minister has said he is confident the government will survive

Lisbon’s borrowing costs spiked to levels that are seen as unsustainable during the week because of the political turmoil then slipped back but the S&P downgrade caused them to edge up again.

The latest crisis has raised questions about the government’s commitment to further spending cuts.

Even before the crisis, the IMF warned that Portugal’s debt position was “very fragile”.

It is expected to peak close to 124 percent of annual economic output in 2014.

Moody’s Investors Service rates Portugal Ba3 with a negative outlook. Fitch rates the country BB-plus, also with a negative outlook. On Friday S&P also affirmed Portugal’s BB long-term sovereign credit rating.