Portugal does not need to apply for EU aid, Spain's Economy Minister said on Monday, as pressure mounted on Lisbon to seek outside help in managing its finances and risk premiums on both countries' debt widened.
Portugal doesn't have to seek any type of rescue plan because it is meeting its commitments. From the point of view of the Spanish government, we're sure the meeting of commitments will be recognized, Elena Salgado said during a radio interview.
Markets believe Spain would be at greatest risk of needing outside help after its Iberian neighbor.
Yield spreads on both countries' bonds hit their widest against benchmark German Bunds since December 1, with Portugal at 442 basis points and Spain at 273.
Salgado said the pace of Spain's economic recovery would continue to pick up in 2011 and the government, battling the highest unemployment in the euro zone at nearly 20 percent, expects net jobs creation in the second half.
The government will also continue to push through key reforms, she said, including pension reform that aims to raise the retirement age to 67.
Local media reported on Monday that Salgado and Deputy Prime Minister Alfredo Perez Rubalcaba tried at the weekend to persuade union leaders to back the pension reforms, which they have so far strongly opposed.
Unions have threatened a general strike if the government forces the reform through. A one-day strike on September 29 hit factories and transportation sectors but had limited impact in other areas of business.
(Reporting by Tracy Rucinski; Editing by Fiona Ortiz, John Stonestreet)