Press review: The Portuguese debt crisis
6% interest rates for a year; 9% for 10 years… No highly indebted and economically stagnating country could have made it. Add to this a profoundly divided political landscape on the measures to be taken to tackle the crisis – and incapable to agree on whether or not to involve the IMF in the rescue plan.
Unable to refinance its debt on the markets, Portugal finally saw in to ask for an emergency help from Europe and the International Monetary Fund. The European Stability Fund has unlocked 90 billion Euros to help out the Portuguese economy. Who will nevertheless have to go through a drastic austerity cure.
Portugal’s case is nevertheless not comparable to the Greek waste. Agreed, Portugal’s deficit is abysmal (8.6% of GDP). And Portuguese debt has just been lowered by international rating agencies, just one notch above “junk”.
What we are seeing here is not a debt crisis per se. Rather, we are seeing the consequences of markets loosing trust. Portuguese fundamentals are just as shaky as those of its neighbors. France, Spain, Italy and Great Britain are struggling with unbearable levels of debt. An example that its Western counterparts should urgently think about.
