Portugal urges Ireland to consider eurozone's needs

15th November 2010, Comments 0 comments

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

Teixeira dos Santos said Portugal had suffered a "contagion effect" from concerns over Ireland's abilities to repay its debts, which have seen Irish government bond yields shooting through the roof over the past week.

"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."

Ireland admitted earlier Monday that it had "ongoing contacts" 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.

Portugal, like Ireland, is struggling with burgeoning public debt and deficit levels and as a result have had to pay ever higher returns to bond buyers in order to raise funds.

The yield on its 10-year bonds rose above 7.0 percent on Wednesday for the first time it joined the eurozone, before retreating 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 depending on the support of the centre-right opposition to pass an unprecedented austerity budget, it has also found itself in the crosshairs of the financial markets.

Foreign Minister Luis Amado warned at the weekend that this 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 added.

© 2010 AFP

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