LISBON, Portugal (AP) — Portugal asked for a bailout Wednesday to relieve its crushing debt, joining Greece and Ireland by becoming the third eurozone nation to seek outside help amid a bruising financial crisis.
Prime Minister Jose Socrates went on national television to announce that Portugal must take international assistance to save its rapidly deteriorating economy, after months of insisting that he would not ask for a bailout.
Socrates said his caretaker government asked “for financial help, to ensure financing for our country, for our financial system and for our economy.”
He did not say how much Portugal would seek, but analysts have predicted Portugal will need up to euro80 billion ($114 billion). That amount is bearable for Europe’s finances unless other nations — notably Spain — end up asking for help.
Portugal urgently needs the rescue because it has been forced to pay increasingly unsustainable interest rates to persuade investors to buy its debt. Banks from Spain to Germany are heavily exposed to the possibility of a Portuguese default, which would threaten the very existence of the zone.
But analysts believe a package to save Portugal will be crafted by the European Union and the International Monetary Fund. European Commission President Jose Manuel Barroso said in a statement after Socrates’ announcement that Portugal’s request “will be processed in the swiftest possible manner.”