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Portugal said Tuesday that several state-run companies face losses that could hit some three billion euros ($4 billion) from “highly speculative” financial deals they entered into in recent years.
The discovery by the government is a serious blow to the small eurozone country which is already scrambling to meet the austerity conditions linked to its 78 billion-euro bailout.
The finance ministry said several of the deals were not simple instruments designed to reduce risk, but contained “highly speculative structures.”
The daily Publico said the deals involved swaps which pushed up interest rate on some loans to 20 percent.
According to local media, the bulk of the deals were discovered in the transport sector, involving companies running the Lisbon and Porto metros as well as the national railway.
The finance ministry added the deals had been entered under the former government which was ousted by the current centre-right coalition in June 2011.
It added talks were underway with the banks involved to compensate for potential losses suffered by the state.