Portugal is cautioned over high debt, low investment

The Organization for Economic Cooperation and Development is warning Portugal that its fragile banks and high national debt make it especially vulnerable to international events, such as a slump in world trade or financial difficulties in other eurozone countries.

The 34-nation global policy organization says Portugal must swiftly address the problem of non-performing loans, possibly creating a so-called "bad bank" where they could be held, and boost investment.

The OECD said in a report Monday that bad loans accounted for around 13 percent of all credit granted in Portugal. That was the fourth-highest in the eurozone after Greece, Italy and Ireland. Government debt is at about 130 percent of GDP, one of the highest in the eurozone.

Investment is currently 30 percent lower than in 2005, according to the OECD.