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Is Portugal next in line for a bailout?

Allison Roberts Nov 24, 2010
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Is Portugal next in line for a bailout?

Allison Roberts Nov 24, 2010
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TEXT OF INTERVIEW

JEREMY HOBSON: Borrowing costs are on the rise this morning in Spain and Portugal. Investors are questioning whether those two countries will be the next ones to have problems paying their bills. Some are already saying Portugal will be next in line for a bailout.

Let’s bring in the BBC’s Allison Roberts who’s in Lisbon, where protests are going on over potential spending cuts. Good morning.

ALLISON ROBERTS: Good morning.

HOBSON: Allison it seems that just as Ireland has decided to take a bailout to solve its immediate problems that the Debt Monster, if you will, has landed in Lisbon. It looks like this crisis is really spreading pretty quickly.

ROBERTS: Yes, people here in Portugal have been watching events in Ireland with some trepidation, I might say. Some of the problems are a little different. Portugal doesn’t have the same problems with its banking system that Ireland does, but it does have big problems with its deficit. Given that the main opposition party here has promised not to vote against the socialist government’s austerity budget for next year, that isn’t a problem in itself. But it seems that what the government does doesn’t directly influence the markets, or indeed IMF and EU official’s decisions, so it may well be that Portugal will eventually be forced to take some kind of a bailout.

HOBSON: Looking at this crisis from a distance, I would think that a country would be happy to be helped out by it’s neighbors, but certainly that was not necessarily the case in Ireland. What are the people that you’re speaking to in Portugal saying about the prospect of taking help from neighbors, should that be necessary?

ROBERTS: Well Portugal as something of a trauma with regards to the IMF. The IMF landed, if you will, in Portugal in the 1970s and the 1980s, and there was some very painful cuts in public spending then, at a time when the welfare safety-net was very underdeveloped. But in general, the main opposition at the moment is coming from organized labor in a general strike today. Large numbers of public sector workers taking part, and unions say that not more austerity is needed but steps to boost growth.

HOBSON: The BBC’s Allison Roberts joining us from Lisbon this morning. Thanks so much.

ALLISON ROBERTS: Thank you.

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