Portugal’s finance minister said today that he does not expect his country will need a bailout to resolve its financial problems.
Fernando Teixeira dos Santos said in a radio interview today that the government was taking steps to reduce the country's high debt, which has worried markets and brought a potentially unsustainable surge in its borrowing costs.
He added that Europe was not doing enough to ensure the stability of the eurozone.
"We have to be focused on doing all we can to avoid (a bailout)," he said on TSF radio.
Mr Teixeira dos Santos insisted that Portugal is still able to raise money on financial markets, even though its 10-year bond yields continue to hover around euro-era records of more than 7 per cent.
The euro closed yesterday at a four-month low against the dollar as The European Central Bank (ECB) stepped up its purchases of Portuguese bonds.
Lisbon is preparing for a crucial test of investor sentiment with the auction tomorrow of €1.25 billion in five- and 10-year bonds.
A Portuguese central bank board member, Teodora Cardoso, was quoted as saying Lisbon would do better to seek international financing, breaking ranks with political leaders.
"It would be easier if we had foreign help because this would mean that the adjustment would not be so abrupt, but if we do it alone, for the markets to believe in it, it has to be brutal," Mr Cardoso said according to news agency Lusa.
Breaking ranks with a chorus of European officials who have insisted that further rescues were by no means inevitable, Finnish finance minister Jyrki Katainen said on today that Ireland may not be the last country to seek financial aid.
Speaking to a local broadcaster, Mr Katainen also said Lisbon needed to act decisively to calm markets, though he declined to say whether there were any talks about loans to Portugal.
"Portugal has already announced many actions, but it would be good to review what more could be done," he told MTV3.
Asked about a report that Germany, France, Finland and other euro zone countries were pushing Portugal to seek an assistance programme to prevent contagion spreading to much larger Spain, Mr Katainen said: "I cannot comment on other countries' actions ... because rumours create new rumours."
The renewed turmoil is weighing also on Belgium, where worries about the high national debt are compounding tension over the failure of the country's linguistically-divided leaders to form a government seven months after a general election.
King Albert II yesterday ordered the caretaker government to draft a budget plan for 2011 which will cut the budget deficit to 4.1 per cent from 4.8 per cent in 2010. The target implies cutbacks or tax increases of €1.8 billion.
Agencies