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Portuguese debt crisis

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Portuguese debt crisis


As Portugal prepares for a general election in June, all eyes are now on the country’s ability to pay back its huge debts.

The uncertainty caused by the risk could force Portugal to ask for a huge financial bail out from the EU and the IMF, similar to those granted to Ireland and Greece.

The country’s credit rating has been continually downgraded recently, and it needs to pay back over 4 billion euros in maturing bonds by the middle of this month.

Prime Minister Jose Socrates resigned last week after his latest proposals for austerity measures were rejected in the face of protest.

He insists that Portugal can manage without an international bail out.

Nuno Saraiva is Deputy Chief of the Diario de Notícias newspaper and also an analyst.

Euronews asked him if anyone really knows the true state of Portugal’s financial situation.

“Before anything else, we have to underline the differences between what happened with Greece and Ireland and what’s happening in Portugal.

‘Recently, an EU mission came to Lisbon to check the public accounts and it detected nothing abnormal. The EU has always said that everything was in line with the compromise found in Brussels.

‘However, on the other hand we also have to underline that this review of the public deficit comes from the introduction by Eurostat of new accounting elements which deepened the public debt,” he told euronews.

Resorting to outside help seems inevitable today, in spite of the reticence of most politicians. Who is afraid of the IMF in Portugal, and why? What does Nuno Saraiva think?

“I think everyone is scared. When the IMF arrives in a country, and we saw this recently in Greece and Ireland, it doesn’t mean things are going to get better; just the opposite!

‘If Portugal has the means to handle this on its own, and that would be preferable, it wouldn’t be as hard for families as the IMF coming in.

‘The IMF doesn’t step into a country for short periods; it’s always for the long term. For a country to get back to health after IMF-imposed austerity measures can take time.

If the next government also refuses IMF help, what sort of solution will prevent the country collapsing? Could it abandon the euro?

“I don’t think leaving the euro is foreseeable. What could happen is that the next government should adopt the same measures as those rejected by the parliament, the same measures that the outgoing Prime Minister committed to in Brussels, and the new government could even make them tougher. If the next issuing of government bonds fails to finance us, it means that if we don’t have enough time to seek outside help, we’ll be bankrupt,” he concluded.

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