Portugal to seek bail-out

Financial aid has become “inevitable”, prime minister admits.

Portugal has become the third eurozone country to request a bail-out from the EU.

José Sócrates, Portugal’s caretaker prime minister, tonight ended weeks of speculation by confirming that he had asked the EU for financial support.

He said: “I always said asking for foreign aid would be the final way to go but we have reached the moment.

“Above all, it’s in the national interest.”

The government’s decision means that Portugal will now follow Greece and Ireland, both of which have received loans from the EU and the International Monetary Fund (IMF).

Sócrates acknowledged that resorting to international aid had become “inevitable” following his minority Socialist government’s resignation last month in the wake of the defeat in parliament of proposed austerity measures. Since then, the political uncertainty has sent the cost of borrowing soaring.

“I tried everything but we came to a moment that not taking this decision would bring risks we can’t afford,” Sócrates said.

Sócrates did not say how much his country would ask for or in what form the assistance would come.

Earlier today the European Commission said the European Financial Stability Facility (EFSF), the bail-out fund set up in the wake of the Greek crisis, could not provide bridging loans.

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In a statement, the Commission said: “The president of the European Commission assured that this request will be processed in the swiftest possible manner, according to the rules applicable.”

Shortly before Sócrates’s statement, Portugal’s finance minister told the Portuguese newspaper Jornal de Negocios that a bail-out was on the cards.

Fernando Teixeira dos Santos said: “I believe it is necessary to resort to the financing mechanisms available in Europe.”

This morning the Portuguese government raised €1 billion in an auction of debt but the interest rate it must pay to lenders was significantly higher than it was last month.