I think there has been a tentative to blow the Portuguese situation out of its context in the last few days. Being in the UK this week, I could see the comments from some press and media, trying to find similarities between Portugal and Greece's situation - and implying that Portugal is on the verge of bankruptcy. That is simply not true.
Portugal is not in a good shape, but has been setting a number of strong and hard reforms, aimed at bringing competitiveness back to the economy. A few of them are changes in the labor market, judicial reforms that are starting, reduction on the drag of a high and uneffective public sector (like transportation,...) and reducing State participation in companies outside of its purpose. Of course, we (including myself) would always like to happen faster - but, for others, the ones who are most affected, it is too quick. We have to find a balance there, but, we are doing and implementing them in a 2 to 3 years period. Those changes will effectively change the Portuguese economy, towards a more agile, modern and entrepreneurial one.
The Portuguese banking system is under control. Of course it is still far from being perfect and we still might have a few issues - namely on BCP. But we shouldn't expect any major disaster coming from that area, one that goes beyond the level of help that is already in place for all european banks - actually, when we look at stress tests results, most Portuguese banks are in a better shape than Italians and French ones.
Despite the huge number of reforms and changes, the Portuguese people understands we need them. And, though it doesn't like the impact of those changes, it accepts them, as it knows it will pay in the near future. Portuguese are especially... resilient and tough, and are ready to pass tough times but still make it through. You can see that even in terms of political alignment, as the main parties, share common trends on the current situation (with, naturally, some discussion and different opinions on specific subjects). This is a huge difference vs Greece or even Italy's.
It is true that Portugal might need to request help in 2013 - and I think we shouldn't try to hide it. But, the fact, is the situation will be under control. Meaning we might need it to make sure we are able to pay our debts, but the economy will be in a better shape and, hopefully, starting to recover, the huge unbalanced situation we have in the public sector and in some towns will be addressed - we will be in good shape to controlling the deficit and to start making the economy grow again. I agree with Riley - even if Portugal might need further help from EU and FMI, default is not a likely situation. And you can quote me on that!
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