First came Greece, then Ireland. Now, Portugal looks set to become the latest European country to require a financial lifeline from the European Union. The country's prime minister resigned on Wednesday after his government refused to approve new, stricter austerity measures, and credit ratings agencies promptly slashed Portugal's rating. Political uncertainty could not have come at a worse time for Portugal, which must pay off almost 10 billion euros of its debt by mid-June. The country may also have to borrow between 70 and 80 billion euros ($99 billion to $114 billion) from the E.U. to finance its continuing obligations. But a bailout would undoubtedly anger the eurozone's better-off countries, after the 177.5 billion euros ($250 billion) loans to Greece and Ireland last year. Is a bailout in Portugal inevitable? (Watch a Euronews report about Portugal's predicament)
Yes. Portugal is bust: Although its problems aren't as serious as Greece and Ireland, says The Economist, Portugal's economy is in big trouble. The government now predicts the country will slide back into recession, and the austerity measures already in place will "likely slow the economy further." All of this will make it very difficult for Portugal to pay off its sizeable short-term debts. "Default looks inevitable."
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.