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Portugal: Money Crisis Goes On

  • April 8th, 2011
  • Posted by EUEditor

eu-money-ec1.jpgEuropean Union Finance Ministers have been debating the application from Portugal for special loans, while some added pressure comes from a rise in official interest rates.

The caretaker government in Portugal made the application on Thursday, following the defeat in parliament (23.3.11) of the Socialist party government, over rejection of austerity measures it was attempting to introduce.

Portugal is the third country, following Greece and Ireland to falter in the ongoing sovereign debt crisis, needing to draw on the EU special fund established in the last year.

While Finance Ministers were starting a meeting in Hungary (8-9.4.11),  in Frankfurt, the European Central Bank raised its key rate by 0.25 of a percentage point to 1.25%.

It said that despite the problems in Portugal and elsewhere,  the increase, the first in almost three years, had been provoked by  inflationary pressure, and would provide stability.

Actual inflation rates, if getting persistent, are hardly explosive at this time.

Eurostat figures show the annual inflation rate in the Euro area rose to 2.6% in March this year, against 2.4% in February.
Reference

BBC News, London, Portugese bail-out …, 8.4.11.  http://www.bbc.co.uk/news/world-europe-13010678, (8.4.11).

Bloomberg Business Week, AP, NY, “ECB raises interest rates despite debt crisis”,
http://www.businessweek.com/ap/financialnews/D9MER65G0.ht, (8.4.11).

European Union Delegation to Australia, Canberra, Newsletter 305, “EU Economy”, 7.4.11. delegation-australia@ecdel.org.au

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