Portugal May Need a 2nd Bailout

Country's troubles likened to Greek crisis
By Matt Cantor,  Newser Staff
Posted Jan 25, 2012 7:10 AM CST
Portugal May Need a 2nd Bailout
Portugal's prime minister Pedro Passos Coelho.   (AP Photo/Guillaume Horcajuelo, Pool)

In order to pay back $11.6 billion in debt, Portugal needs to re-enter capital markets next year—and as it stands, that's looking like a tall order. The deadline isn't until September 2013, but the International Monetary Fund could call on the country to release a financial plan a year in advance. And if it looks like Portugal will be incapable of accessing markets, the IMF could overhaul its bailout, the Wall Street Journal reports.

Economists are concerned over the high yields—greater than 12%—on Portugal's bonds. "Bondholders must surely realize that Portugal has very little realistic prospect of paying back its debts in full," says an analyst. The economy's slower-than-expected growth is raising the specter of the crisis in Greece. While Prime Minister Pedro Passos Coelho has expressed confidence, the government worries that even its best efforts to uphold bailout terms may fall short. "The drama of it all is that we can do our job exactly as required, and, if Europe doesn't answer adequately, it may all be in vain," says a former finance minister. (More Portugal stories.)

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