Portugal 'well-equipped to resist damage from Greece'

LISBON (AFP) - Portugal's economy will escape substantial damage from a further deepening of the crisis in Greece, its president and prime minister said Monday.

Portugal is widely considered to be the next weakest eurozone economy after Greece and the Lisbon stock market slid more than five per cent on Monday in the wake of Greece's decision to close its banks for a week.

President Anibal Cavaco Silva insisted however: "The growth of Portugal will not be unduly affected by an incident with Greece." He told journalists the 19-nation eurozone "now has so many instruments" to prevent contagion should Greece slip further into trouble.

"Portugal is now in a similar situation to Ireland, Spain and Italy," and was at no greater risk than those three countries, he said.

He urged Greece to enter into fresh negotiations with its creditors.

"I hope the Greeks are not going to leave the eurozone and will eventually return to the negotiating table," Silva said.

Lisbon was the biggest faller of the European exchanges on Monday, sliding 5.2 per cent.

In 2011, Portugal's economy, on the verge of collapse, became the third eurozone country after Ireland and Greece to be bailed out.

It left the bailout scheme in May 2014 but only after implementing stringent austerity measures in return for funding.

This year the government forecasts 1.6 per cent growth.

Prime Minister Pedro Passos Coelho also insisted Portugal was well-equipped for the crisis.

While "no-one was immune" from the Greek crisis, Portugal "has not been caught unprepared", he said.

He said thanks to large financial reserves, Portugal's treasury "is in a position to deal with market volatility for several months".

"In 2010 and 2011, Portugal was extremely vulnerable. The situation is not the same today. We are no longer as exposed to the Greek situation," the prime minister said.

Unlike Greece, which appears almost certain to renege on a payment of 1.5 billion euros to the IMF due Tuesday, Portugal has already paid back 8.4 billion euros, equivalent to 30 per cent of its debt to the IMF.