Portugal's central bank on Tuesday releases its projections for the country's economic outlook and investors are likely to watch closely for changes in the growth forecast, as the country has been plunged in a political crisis because of its austerity measures.
Yields on the country's sovereign bonds raised further Monday, as Standard&Poor's reiterated that it could downgrade Portugal again, after it cut its rating by two notches to BBB from A- last week, according to a Dow Jones report.
Portuguese Prime Minister Jose Socrates resigned last week after losing a vote on his government's plan to introduce further austerity measures to deal with the crisis.
Carlos Moedas, Special Economic Advisor for Portugal's opposition Social Democratic Party, told CNBC the country should not accept help from the European Union as it risks losing its credibility by doing it.
"We think that the big problem with Portugal is not a question of cutting the budget, it’s the question of creating the conditions, and so here we are today," Moedas said, adding that the country needed structural reforms.
"If you look at the cuts that this government was actually doing, it was basically cutting the weakest links of society, cutting rations of people that make 200 euros a months and not cutting the real set of the state," he added.
Portugal's unique location is Europe could turn it into the continent's Florida but the country needs to invest in the seaside and tourism, Moedas said.
"I do believe that we have a very strategic position in Europe as being the link to the Atlantic and so we have several industries in Portugal that can be the future but we need those structural reforms to attract more people to invest in our country," he said.
Being in the euro zone is actually "a great opportunity" because it makes countries strive to be more productive and make structural reforms, Moedas added. "If we just keep on cutting an not doing the reform, we have no solution, we will eventually become the Alabama of the European Union and we don’t want that," he said.
- Carly Baggett contributed to this report