Portugal's caretaker government said on Wednesday it had decided to seek financing from the European Union in an abrupt turnaround after resisting a bailout for months despite sharply deteriorating financial conditions.
The nation of 10.5 million became the third member of the euro zone to seek a rescue after Greece and Ireland after months of fending off market pressure to request assistance, as borrowing costs soared amid deepening political instability. Prime Minister Jose Socrates said in a televised statement that parliament's rejection of additional austerity measures last month had aggravated the financial situation, ultimately making the request for aid "inevitable."
(...)
Socrates cited no figure but a euro zone official estimated Lisbon is likely to need between 60 and 80 billion euros in European and International Monetary Fund loans over three years. Any assistance will be subject to strict conditionality.
(...)
EU officials have been striving to prevent financial market contagion spreading beyond Portugal to affect larger economies such as Spain, which has undertaken major economic reforms, budget cuts and a banking clean-up to stay out of danger.
Portugal has implemented a series of spending cuts, tax rises and wage curbs and the government proposed further measures to reduce the public deficit to 4.6 percent of gross domestic product this year after missing last year's 7.3 percent target. Following a restatement of public accounts, the 2010 deficit came in at 8.6 percent.
Socrates' caretaker government said last week it lacked the constitutional authority to negotiate an economic adjustment program with the EU and IMF, raising a potential obstacle to an early deal. The prime minister said he had made the request within the limits of his caretaker role.
No comments:
Post a Comment