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Portugal attempts to avoid bailout

Portugal vowed Thursday to "do all it can" to avert a bailout after Prime Minister Jose Socrates stepped down following a showdown with parliament over his minority government's latest austerity plan.

world Updated: Mar 26, 2011 00:16 IST

Portugal vowed Thursday to "do all it can" to avert a bailout after Prime Minister Jose Socrates stepped down following a showdown with parliament over his minority government's latest austerity plan.

Socrates, in power since 2005, tendered his resignation late Wednesday, saying he could not govern without support after all five opposition parties voted against his fourth austerity programme in a year.

The package of spending cuts and tax hikes was aimed at averting the need for an EU-IMF bailout to help Lisbon meet debt repayment obligations, like the aid granted fellow eurozone members Greece and Ireland last year.

"This crisis will have very serious consequences in terms of the confidence Portugal needs to enjoy with institutions and financial markets," Socrates said after presenting his resignation to President Anibal Cavaco Silva.

The events in Portugal threatened to derail a two-day EU summit that got under way Thursday in Brussels expected to finalise the bloc's response to a year-long eurozone debt crisis.