Pressure grows on Portugal

City A.M. Reporter
PRESSURE is growing on Portugal from Germany, France and other Eurozone countries to seek financial help from the EU and IMF to stop the bloc’s debt crisis from spreading, a senior Eurozone source said yesterday.

Some preliminary discussions on the possibility of Portugal asking for help if its financing costs on markets become too high have taken place since July, the source said.

No formal talks on aid have started yet, a number of Eurozone sources said, but the pressure was rising in the Eurogroup, which brings together Eurozone finance ministers.

“France and Germany have indicated in the context of the Eurogroup that Portugal should apply for help sooner rather than later,” the source said, adding Finland and the Netherlands expressed similar views.

Earlier yesterday a Portuguese government spokesman denied claims that Lisbon was under pressure from Berlin and Paris to seek a bailout from the European Union and International Monetary Fund.

Many policymakers hope EU/IMF financing for Portugal would ring fence the Eurozone debt crisis, in which Greece and Ireland have already taken bailouts.

Help for Lisbon would aim to protect Spain which might be next in line, but whose financing needs would stretch current Eurozone aid capabilities to the limit.

The source said Portugal’s bailout would likely total between €50bn (£41.5bn) and €100bn.