By PATRICIA KOWSMANN Finance Minister "cautiously optimistic" on crisis resolution Says governments very committed to a solution Says Portugal's structural reforms on track LISBON (Dow Jones)--The euro zone and Portugal are in a much better position to overcome the crisis that has threatened the common currency than they were weeks ago, Portugal Finance Minister Vitor Gaspar said in an interview. "I am cautiously optimistic," Gaspar said. "At the European level, we now have the various elements that give us the outlines of a permanent-lasting solution to the governance weaknesses that the sovereign debt crisis of the euro area revealed," he added. Earlier this month, European Union countries with the exception of the U.K. agreed on an intergovernmental accord on new fiscal rules for the region, including penalties for violating budgetary restrictions. Gaspar said all governments are "very committed to getting a solution in place as fast as possible," adding he expects goals to be met including the advance of EUR200 billion to the International Monetary Fund. The finance minister also praised steps the European Central Bank has taken, including its latest move to provide EUR489.19 billion in low-interest, three-year loans to hundreds of euro-zone lenders in need of liquidity. "In my view the ECB has played a very constructive role throughout this crisis. The last decisions the ECB has announced at the beginning of December are very important and they do contribute significantly to stabilize the situation," he said. Turning to Portugal, Gaspar said it is clearer now that the country is on the right path to fix its large budget deficit and steer the country to future growth through a series of structural reforms. Portugal, which requested EUR78 billion of aid from international peers in April, is implementing tough austerity measures to control spending and increase revenue. For 2012, it must cut some EUR8.5 billion from its budget to meet a deficit target of 4.5% of gross domestic product, down from 9.8% in 2010. To do that, it will cut public wages, increase taxes on products and services, and make sharp cuts in the health and education sectors. While the moves have led unions to stage a general strike last month, Portugal continues to be a heaven of calm compared with euro-zone peers Greece and Spain. The country also enjoys political stability, with the current center-right government--which took over in June--enjoying a majority in parliament. "The single most important challenge for Portugal is to correct the fundamental macroeconomic imbalances of the Portuguese economy in order to create the conditions that will enable sustainable growth," Gaspar said. For 2011, the government said its deficit target will be sharply below a 5.9% of GDP target, thanks to a one-off measure under which some banks' pension funds will be transferred to the state's pension plan. The government will assume future liabilities, while getting some EUR6 billion in assets immediately. Without the one-off, the deficit for 2011 would be around 8% of GDP. Gaspar said structural reforms, including a move to make the country's labor market more flexible, are "broadly on track" and will be a bigger focus going forward. "That is where growth, competitiveness and job creation will come from," he said. -By Patricia Kowsmann, Dow Jones Newswires; +351-916-466-297; patricia.kowsmann@dowjones.com

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