Europe Debt Crisis Captures 3rd Victim
The Europe debt crisis gained a third casualty when Portugal caretaker Prime Minister Jose Socrates announced on Wednesday, April 6, 2011, that it will seek financial aid from the European Union to save its rapidly deteriorating economy.
The bail out request came when Portugal’s biggest banks declared that they will no longer buy national debt because they will have to deal with their own liquidity problems first.
Portugal insisted for almost a year that it will not seek outside assistance because a bail would lock them into austerity measures like tax raises and wage cuts for years.
Nevertheless, they had to make the decision because according to Socrates, if they won’t, the country will be bought to further risks it should not be exposed to.
Portugal did not declare how much it planned to borrow but analysts predict that they need up to €80B ($114B).
The amount is bearable for the EU unless other countries, probably Spain, also end up asking for help.
EU Commission President Jose Manuel Barroso assured Portugal that its request will be processed swiftly.
He also expressed confidence that Portugal will be able to overcome its present situation, with the solidarity of its partners.
Aside from the EU, IMF is also willing to assist Portugal.
Portugal’s financial crisis rooted from a decade of amassing huge debt regardless of measly economic growth to finance social programs and government expenses to give Portugese benefits similar to their European neighbors.
Portugal is the third Euro country to receive financial assistance after Greece and Ireland.