LISBONLISBON (Reuters) - Portugal's caretaker government could seek a bridging loan if the country's financial crisis escalates, the leader of opposition Social Democrats (PSD) said on Saturday, adding he hoped no bailout would be needed.
Pedro Passos Coelho told Reuters in an interview that his party is fully committed to meeting budget goals agreed with Brussels, saying of any bailout: "I think we must avoid a situation like that."
However, he added that if there is an "emergency situation and there is a need for an emergency loan to avoid a Portuguese default situation" until an expected snap election in June, the caretaker government has the power to seek one.
Portugal slid into political crisis this week as the Socialist minority government resigned after Passos Coelho's party and other opposition parties rejected austerity measures in parliament. The Socialists will remain as a caretaker government for now.
There are concerns in financial markets that the political limbo that will remain until a snap election could make it very difficult for Portugal to finance itself in debt markets, especially as it has to meet a bond payment in April of 4.5 billion euros ($6.4 billion).
Another payment of a similar size is due in June. The government has said it expects no problem in meeting its debt payments.
"I don't think anybody in Portugal, or in Europe, would leave Portugal to default because we are having elections," Passos Coelho said. "Clearly not."
Portuguese bond yields have shot higher since the crisis erupted and two rating agencies downgraded the country's credit ratings because of the uncertainty created by the government's resignation.
The crisis prompted many economists to predict Portugal will need a bailout like Greece and Ireland soon.
Passos Coelho justified his party's rejection of the government's latest austerity plan -- the trigger for the current crisis -- by saying the government's measures do not go far enough to fix Portugal's problems.
"We voted down the austerity package not because it went too far but because it didn't go far enough to deliver results on public debt," he said. "I think a new government can bring new results and new confidence to the markets."
He rejected the suggestion that the collapse of the government and the failure by parliament to pass austerity measures caused the crisis, saying that interest rates have been at unsustainable levels since October.
"What has happened is that markets don't believe the government has sufficient credibility and legitimacy to meet its goals," Passos Coelho said.
The minority Socialist government has faced a tough situation since it was elected in 2009, having to seek support from other parties through the euro debt crisis for several austerity packages.
The PSD had supported all measures until now but Passos Coelho said the government had shown it was not capable of cutting expenditures as had been agreed.
"It never delivered on the structural reforms that are necessary for growth," he said.
Passos Coelho would not give details of his economic plans, saying he will announce them as the election campaign starts. But he stressed that the PSD would deliver results by focussing on cutting state spending.
"We would focus on cutting expenditure and not on revenue," he said.
Many economists say one of Portugal's key problems is the unwieldy size of its public sector. "We need a more frugal government, which can set an example to society."
He would also boost privatisations, including proposing to sell off a minority stake in state bank Caixa Geral de Depositos, state airline TAP and other transport companies such as public railways.
Some analysts have said Passos Coelho will still not face an easy task in getting to power, considering that Prime Minister Jose Socrates is a strong campaigner. However, the PSD is confident it will win, he said.
"Most polls indicate that people are tired of the government," he said. "I am very confident that we will win a large majority."
(Reporting by Axel Bugge and Sergio Goncalves; Editing by Ruth Pitchford)