Portugal late yesterday said it had decided to request financial assistance from the European Union to resolve its debt problems amid growing speculation that it needs a bailout.
Having resisted for months pressure from the markets as well as European partners, outgoing Prime Minister José Socrates in a televised address justified the request as needed after parliament rejected his new austerity programme which, he said, “aggravated in a dramatic way the country’s financial situation.”
“I am firmly convinced that that is going to be further aggravated if nothing is done,” added Mr Socrates, who resigned on March 23 after parliament’s rejection, opening the way for new elections set for June 5.
The European Commission confirmed the move.
“The Portuguese Prime Minister José Socrates, today (Wednesday) informed the President of the European Commission José Manuel Barroso of the intention of Portugal to ask for the activation of the financial support mechanisms,” a statement said.
“The President of the European Commission assured that this request will be processed in the swiftest possible manner, according to the rules applicable.
The statement also said that Mr Barroso “reaffirms on this occasion his confidence in Portugal’s capacity to overcome the present difficulties, with the solidarity of its partners.”
Portuguese Finance Minister Fernando Teixeira dos Santos earlier admitted that his country would have to use EU mechanisms.
“I believe it is necessary to have recourse to the financing mechanisms which are available within the European context,” Teixeira dos Santos said in written replies to questions submitted by business daily Jornal de Negocios.
“The country has been pushed, in an irresponsible manner, into a difficult situation on the financial markets,” the minister said, referring to the rejected austerity programme which brought down the government. “Faced with this difficult situation, which could have been avoided, I believe it is necessary to have recourse to the financing mechanisms available within Europe, adapted to the current political situation,” he said.
“Such an approach would also require the involvement of the main political groups and political institutions,” he added in comments posted on the newspaper’s website.