Portugal at high risk of needing bailout: finance minister

15th November 2010, Comments 0 comments

Portugal is at a high risk of needing a bailout due to the danger of contagion from other debt-hit euro nations, the country's finance minister said in comments carried by the Financial Times Monday.

"The risk is high because we are not facing only a national or country problem," the FT website quoted Fernando Teixeira dos Santos as saying in reference to the possibility Lisbon will need international financial aid.

"It is the problems of Greece, Portugal and Ireland. This is not a problem of only this country," he added.

His comments came after Ireland said it was in talks with "international colleagues" on its budget woes but denied reports that it was seeking EU assistance similar to that received by Greece earlier this year.

Greece, meanwhile, acknowledged Monday it would breach conditions for a new installment of the 110-billion-euro (150-billion-dollar) bailout as Greek public deficit and debt figures for the four years to 2009 were revised up sharply on Monday.

Finance Minister Teixeira dos Santos said: "This has to do with the eurozone and the stability of the eurozone, and that is why contagion in this framework is more likely.

"It is not because markets consider we have similar situations. They are only similar in what concerns markets but as I said they are very different."

The Portuguese minister insisted that Portugal was improving its finances as it struggled with burgeoning public debt and deficit levels.

Teixeira dos Santos said earlier on Monday that Ireland must take the eurozone's needs into consideration as Dublin mulls whether to seek a possible EU bailout.

"I would not want to lecture the Irish government on that," Teixeira dos Santos said in an interview with Dow Jones newswires.

"I want to believe they will decide to do what is most appropriate together for Ireland and the euro. I want to believe they have the vision to take the right decision."

The yield on Portuguese 10-year bonds rose above 7.0 percent on Wednesday for the first time since it joined the eurozone, before easing back to 6.540 percent at the end of the week. They rose to 6.597 percent in trading on Monday.

With a minority Socialist government dependent on the support of the centre-right opposition to pass an unprecedented austerity budget, Portugal has also found itself in the crosshairs of the financial markets.

Foreign Minister Luis Amado warned at the weekend that the delicate political situation risked disaster for the country.

"If we are not able to ensure confidence in the governability of the country we could find ourselves with an absolutely dramatic situatio," Amado was quoted as saying in the weekly Expresso.

"The alternative ... is, in the end, leaving the euro," he said.

© 2010 AFP

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