Moody's downgrades Portugal debt to junk

Portugal's embattled Finance Ministry

HOBSON: Forget Greece. When it comes to the European debt crisis, the focus is on Portugal this morning. The country had its debt rating downgraded to junk last night by Moody's. which said Portugal may need a second bailout.

For more, let's bring in Fernando Alexandre, an economist at the University of Minho in Portugal. Good morning.

FERNANDO ALEXANDRE: Good morning.

HOBSON: Well, how does the Portuguese debt crisis differ from the one in Greece, or is it just basically same story, different country?

ALEXANDRE: In a sense we are similar to the Greece economy because we have a debt problem. I think the main difference currently is that the Portuguese people -- they support the agreement that the Portuguese government settled with the IMF and the European Union. The Portuguese people are prepared to accept that we'll try to solve the problem of the public deficit and also the problem of the over indebtedness of the Portuguese economy.

HOBSON: So the Portuguese people may be more ready to make some big drastic cuts. But do you think that this debt crisis is moving faster that officials can keep up with it?

ALEXANDRE: It's true that without the external funding coming from the IMF and the European Union, the Portuguese economy could not comply with its obligations in financial markets. So, it's true that the European Union needs to find probably new solutions to the Greek problem, and also to the Portuguese economy.

HOBSON: Fernando Alexandre, an economist at the University of Minho in Portugal. Thanks so much.

ALEXANDRE: Thank you.

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