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Portugal crisis hits our plea on bailout

PORTUGAL'S plea for financial aid is expected to overshadow Ireland's efforts to secure better bailout terms.

Portugal is to become the third eurozone country after Ireland and Greece to get assistance following the country's request for intervention.

The plea is now likely to dominate a meeting of European finance ministers at which Ireland's situation is on the agenda.

Finance Minister Michael Noonan is expected to push for a reduction in the interest rate on the country's IMF/EU bailout package.

Portugal's prime minister, Jose Socrates, went on television to explain his decision to ask for assistance, saying: "I tried everything but we came to a moment that not taking this decision would bring risks we cannot afford." Portugal's government fell last month and there is now a caretaker administration until elections in early June.

It is expected Portugal will need €70bn to cover the deficits.

The European Commission said the request would be processed in the "swiftest possible manner", while the IMF in Washington said "it stands ready to assist if needed".

Mr Noonan had been expected to initiate a diplomatic drive to secure better bailout terms for Ireland but his efforts look certain to be foiled by the latest development.

Lisbon has had to ask for help before, turning to the IMF in 1983 for help in the wake of the overthrow of its military-backed government.

Mr Socrates denied until the last moment that a financial rescue was needed, despite analysts warning for months that a bailout was inevitable.

However, the government bowed to the inevitable after Portugal was forced to pay a higher interest rate on its bonds than the 5.8pc Ireland is paying on its financial aid package.

Socrates said the rejection of his austerity measures led to an "inevitable" request for aid.

Dan White: Page 14