The two darlings of the bailouts, Ireland and Portugal were heading for the exit doors, but while Ireland looks to sail into the sunset Portugal may find itself shipwrecked on the way out.
Ireland is looking to exit without the need for a precautionary credit line meaning it will be able to fully stand on its own two feet. A story in today’s FT says that the problems may be mounting in Portugal where even that credit line may not be enough to see them straight.
Troika officials are said to be worried about the next weeks parliamentary vote on Portugals 2014 budget which is said to be full of further austerity measures, It will then go to the constitutional court who may vet certain aspects. If any measures get rejected that could throw the budget into disarray and make the chance of a clean exit remote, prompting another bailout.
This would leave Portugal in a serious position and may restrict them from getting back to the market. A senior Troika official said;
One has to differentiate between putting your toe in the water and getting some market access [and dealing with] the very high refinancing need. Do you think after public sector lenders took on so much Portuguese debt that the private sector will be willing to take it all back?”
Just another risk event we need to be aware of but the market is so numb to bailout talk these days that it may not even give it a second glance.
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