Portugal must commit to cuts to calm markets, says Merkel

Portugal's commitment to fiscal consolidation targets is essential to calm financial markets and both the Lisbon government and opposition must be clear on them, German Chancellor Angela Merkel said on Friday.
Portuguese benchmark 10-year bond yields rose to new record highs above 8% on Friday, following the collapse of the government in Lisbon and downgrades of Portuguese debt ratings.
“I made clear that the government but also the opposition must not only stick to the fiscal goals for 2012 and 2013 but also back specific targets that are necessary for achieving these goals,” Merkel told a news conference after a two-day EU summit. “This is crucial if the markets are to be calmed.”
She said euro zone countries had now set the framework for stabilising the 17-nation currency area and only technical details remained to be worked out by the end of June.
At Germany's insistence, EU leaders agreed on Thursday to extend the period for paying into the permanent rescue fund to five years starting from 2013, from a previous arrangement under which half of the money would be paid by mid-2013 with the rest paid in the follow three years.
“The euro has survived a critical test but there is lots of homework to be done. Members states face many years of work to atone for past sins,” Merkel added.