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Portugal's bailout request likely to dominate meeting of EU finance ministers

Finance minister Michael Noonan had hoped Ireland’s financial situation would top the agenda as he looks to lower the country’s interest rate.

Image: Armando Franca/AP/Press Association Images

A MEETING OF EU finance ministers is likely to be dominated by yesterday’s request from Portugal for a bailout following a significant rise in their interest rate on borrowing.

Portugals caretaker Prime Minister Jose Socrates said on Wednesday that he had asked the EU for financial assistance.

This will now be discussed at a two day summit of finance ministers in Hungary which begins this evening.

Portugal’s request for emergency funding makes them the third country to do so after Greece and Ireland.

The meeting had expected to be dominated by a briefing on the state of Ireland’s finances following last week’s bank stress tests and there would also be renewed push for a reduction in Ireland’s interest rate by finance minister Michael Noonan.

However, the situation in Portugal is likely to overshadow this, RTÉ reports.

The request follows a sharp rise in the cost of borrowing following the collapse of the Portuguese government last month after it had failed in its attempt to push through an austere budget.

The EU’s chief economic official Olli Rehn told the Financial Times that Portugal had made a “responsible move”.

Whilst, the EU Commission president Jose Manuel Barroso, a former Portuguese prime minister said Portugal’s request ”will be processed in the swiftest possible manner according to the rules applicable”.

How much Portugal will ask for in aid is not yet clear but the BBC’s businness editor Robert Peston reports that rescue loans could amount to as much as €80 billion.

About the author:

Hugh O'Connell

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