In southern Europe, an astute negotiator unpicks austerity

While Greek Prime Minister Alexis Tsipras struggles with the competing demands of bailout creditors and demonstrators on budget austerity cuts, and with Spain's top politicians unable to unblock a post-election stalemate, Costa is providing a lesson for Europe's financially troubled southern countries on how to move things forward.

Critics says Costa is making high-stakes gambles: already, his budget moves appear to be spooking some investors, with a rise in Portugal's government borrowing rates this week indicating concern about the country's financial prospects.

Among its boldest anti-austerity steps, his government is restoring civil servants' pay that was cut, slashing taxes for low-income families, increasing the lowest pensions, and bringing back four public holidays.

When some criticized his government's recent increase in taxes on auto sales, gas and tobacco, Costa said in a televised public meeting that people should use public transport and quit smoking.

If DBRS joins the other three agencies and cuts Portugal to junk status, Portuguese government bonds would no longer qualify for inclusion in the ECB's asset purchase program and leave it exposed to market volatility.