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Portugal 'will ask for bailout'

Portugal's prime minister has said his country will ask for a bailout due to its high debts and difficulty raising money on international markets.

Jose Socrates said: "The government decided to ask the European Commission for financial help."

Portugal becomes the third financially troubled eurozone country after Greece and Ireland to request assistance from Europe's bailout fund and the International Monetary Fund (IMF).

Analysts expect Portugal will need up to 80 billion euro (£70 billion). A bailout had long been expected as Portugal, one of the 17-nation eurozone's smallest and weakest economies, struggled to finance its economy.

In a televised address Mr Socrates, cornered by his country's mounting financial difficulties, said Portugal was giving up its year-long battle to avoid asking for a bailout from its European partners. He said: "This is an especially grave moment for our country, and things will only get worse if nothing's done," Socrates said, adding that a bailout was "the last resort".

Other European countries have long urged Portugal to accept help in the hope that containing the continent's debt crisis in countries on its outer rim would spare other nations from becoming the targets of market jitters about the eurozone's fiscal soundness.

Over the past year, Portugal insisted it didn't want assistance because the terms of a big loan would lock it into austerity measures for years, lowering the standard of living in what is already one of western Europe's poorest countries. Athens and Dublin were wary of accepting help for the same reasons until they had no choice.

Portugal's difficulties are different from those of Ireland, where banks became over-leveraged during a real estate boom that went bust, and Greece, where unapparent financial commitments came to light and overwhelmed it with debt.

The Portuguese government said later it does not know yet when it will send its formal request for a bailout to European authorities. An official, who spoke on condition of anonymity, told the national news agency Lusa that the government will not request the financial help until it has discussed the terms of a bailout with opposition parties.

The official told Lusa the government must first determine what guarantees debt-stressed Portugal can offer in return for a financial rescue package.


From Belfast Telegraph