Portugal's incoming prime minister has moved to reassure markets of his commitment to cutting the country's national debt, standing by a campaign pledge to go beyond the demands of a €78 billion EU/IMF bail-out package.
Pedro Passos Coelho, leader of the centre-right Social Demcorats (PSD) who defeated the Socialists in a general election on Sunday, also said his government would lower labour costs for exports as a way to revive the economy.
'We must be more ambitious in terms of privatisations, in public media for example,' he said in an interview with French business daily Les Echos.
The PSD backs the privatisation of one of the state broadcaster RTP's two television stations as well as the state water company and the Lisbon metro.
Partially privatising savings bank Caixa Geral de Depositos is also part of Passos Coelho's vision as outlined in a book published in 2010 called 'Change,' as a way to reduce the role of the state in the Portuguese economy.
Portugal became the third euro zone country after Greece and Ireland to seek a bailout after outgoing Prime Minister Jose Socrates resigned in March when parliament rejected his minority Socialist government's latest austerity measures, sending Lisbon's already high borrowing costs sharply higher.
During the campaign, Passos Coelhos warned that Portugal risked following the example of Socialist-run Greece, which now needs even more money a year after it got its bailout, if Socrates remained in power.
Under Portugal's bailout plan, Lisbon must cut its public deficit to 5.9% of gross domestic product by the end of the year from more than 9.0% in 2010 and to within a euro zone limit of 3% of GDP by 2013.
Budget cuts demanded in exchange for the three-year aid package are expected to cause the Portuguese economy to contract by around 2.0% this year and next.
Passos Coelho told Les Echos that since internal demand will not be able to fuel growth in the short-term, Portugal was 'expecting a lot from external demand'.
He vowed to stimulate exports, in part by lowering the cost of labour for firms that export.
'That will be a way to regain export competitiveness. We have no other way, since we are in the euro zone.'
The Social Democrats won 105 seats in the 230-seat legislature in Sunday's election and Passos Coelho has said he will seek to govern with the smaller conservative CDS-PP party which garnered 24 seats.
The two parties together will have a combined 129 seats, with four seats yet to be decided.
