The leader of the finance ministers of the euro area, Luxembourg Prime Minister Jean-Claude Juncker, said on Thursday on FRANCE 24 that Portugal would need 75 billion euros, probably over several years. Earlier he had told a German radio that he did not expect a request for help from Lisbon. Some economists put the figure at 26 billion euros. What are the possible scenarios? What number remember?
Portugal can he get away without asking for financial assistance to the EU and the IMF? This is what Jean-Claude Juncker has suggested initially."I do not think Portugal will apply for financial assistance," he told German radio Deutschlandfunk Thursday.
"Portugal has certainly put in place measures to reassure markets, but there is no guarantee that this will suffice," says FRANCE 24's Christophe Blot, a specialist in the European economy at OFCE-Sciences Po Most economists even think that the country will turn to the EU until June when some of its maturing debt.
In fact, the situation is reminiscent of Ireland. Until the last moment, the European authorities had suggested that Dublin could go it alone."Juncker made a statement of intent, if he had discussed an appeal for EU support, this would have been increasing speculation in the markets," says Christophe Blot.
What are the debts that Portugal should pay? The first major event occurs in June. Lisbon would have to find more than 9 billion euros to pay off a series of loans a decade ago. For the full year, the amount of debt owed is about 26 billion euros.
Lisbon may then become simply asking for 26 billion euros."It is unthinkable for a loan, whose amount would be recalculated as needed, is implemented with a first tranche of 26 billion," said Christophe Blot.
Hence out of 75 billion euros? When the EU assesses the amount of aid, she not only takes into account debts. It also looks at the deficit level to estimate the financing requirements that a country will need to implement measures of fiscal consolidation.
Also - this is what happened to Greece, which received 100 billion euros over 3 years - given the envelope does not necessarily mean that the current year."If we compare Portugal to Greece and Ireland and we observe the country's economic problems, 75 billion euros seem a reasonable estimate," concluded Christophe Blot.
If such support is decided, Europe and the IMF have spent on everything from Greece, 255 billion.
