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6 years ago
Portugal may need 25 billion euros more in bailout: ex official
November 22, 2011 / 6:06 PM / 6 years ago

Portugal may need 25 billion euros more in bailout: ex official

2 Min Read

LISBON (Reuters) - Portugal may need a further 20-25 billion euros in rescue funds to finance public companies that have had their access to market funding cut off, a former government official who negotiated the country's bailout earlier this year said on Tuesday.

Carlos Pina, who as treasury secretary in the previous Socialist administration was a key official involved in negotiations for Portugal's 78-billion-euro bailout in April, said the loan from the European Union and IMF did not reckon with the closure of markets for public companies.

"There is a risk that the 78 billion euros will not be sufficient," Pina told a conference. "There may be a shortfall of 20 to 25 billion euros."

The former Socialist government collapsed in March as financing costs soared, forcing it to request a bailout, which was in place by the time a new center-right government took office in June.

Some economists have said Portugal may need more money because of large debts at its public companies, which they may struggle to roll over after the euro zone debt crisis started spreading to larger countries like Italy and Spain.

Pina said the bailout was negotiated "on the expectation that public companies would have access to markets. If that is not the case, the situation changes."

The current government has said there is no need to change the bailout, which has led to sweeping spending cuts and across-the-board tax hikes to meet tough budget goals.

Inspectors from the European Union and IMF also said last week they did not see need for changes or additional rescue funds.

Reporting By Axel Bugge; Editing by John Stonestreet

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