Portugal's finance minister said today that the country needs financial aid from the European Union. As we've reported before, Portugal's borrowing costs have ballooned after credit agencies have repeatedly slashed its credit rating. Things got worse, after the country's Parliament declined to pass a set of austerity measures. That vote led to the resignation of Prime Minister José Sócrates.
The Financial Times reports that in a statement to the daily Jornal de Negocios Finance Minister Fernando Teixeira dos Santos said this outcome could've been avoided if the austerity measures had been passed. The FT adds:
The request for aid would have to be made in terms that were "appropriate to the current political situation", he said, requiring the "involvement and commitment" of the main political forces.
It was not immediately clear what form a request would take, but the outgoing government has previously said that it did not have the political authority to negotiate a rescue agreement to received funds for the European financial stability facility, the EU's bail-out fund.
Dos Santos' announcement came hours after the country sold close to a billion euros in treasury bills. The Wall Street Journal explains that the country had to sell the treasury bills at an unsustainable yield. In this case, for example, a 5.1 percent yield for 6-month bills, when at a previous auction the country was able to sell them at a 2.9 percent yield.
The AP adds that Portugal, like Greece and Ireland before it, were resistant to accepting an EU bailout 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."