Portugal to 'do all it can' to avoid bailout: minister

24th March 2011, Comments 0 comments

Portugal's outgoing government will "continue to do all it can" to avoid an international bailout, cabinet spokesman Pedro Silva Pereira said Thursday as an EU summit got underway in Brussels.

"The government will fight and continue to do all it can to avoid resorting to external aid which would have very serious consequences for the economy," he said, adding a bailout would involve "a programme of adjustment that the Portuguese people certainly do not want.

"This is an option that the government continued to reject. We don't think this aid in inevitable," he added following a cabinet meeting called to discuss the implications of prime minister Jose Socrates' resignation late Wednesday.

Socrates quit after all five opposition parties voted against the minority Socialist government's fourth austerity plan in a year, setting the stage for early elections in which he has said he will stand.

Pereira Silva said the two fellow eurozone nations which received a bailout last year from the International Monetary Fund and the European Union, Greece and Ireland, were paying higher interest rates on their debt than before and had to implement austerity measures of "extreme violence."

Diplomats virtually ruled out any EU decision on an emergency financial rescue for Portugal during the two-day EU summit but Luxembourg Prime Minister Jean-Claude Juncker, who chairs the group of eurozone finance ministers, said aid of some 75 billion euros (almost $100 billion) would be "appropriate."

Christoph Weil, senior economist at Commerzbank in Frankfurt, said it was "unlikely that Portugal will manage without external support" until the elections, which are expected in May or June.

Despite fears that Lisbon will need a debt rescue, the European stock markets and euro were generally firmer Thursday.

© 2011 AFP

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