Newspaper article The Christian Science Monitor

Portugal Bailout: Who's Europe Rescuing, and by How Much?

Newspaper article The Christian Science Monitor

Portugal Bailout: Who's Europe Rescuing, and by How Much?

Article excerpt

Portugal announced today that it would seek a bailout from the European Union, becoming the fourth country in western Europe to request a financial rescue package. All eyes are now on Spain, the last of the so-called PIGS (an acronym for Portugal, Ireland, Greece, and Spain, the least economically robust members of the eurozone) to not request a bailout. Here's a look at the financial rescue packages for each nation.

Portugal announced today that it would seek a bailout from the European Union, becoming the fourth country in western Europe to request a financial rescue package. All eyes are now on Spain, the last of the so-called PIGS (an acronym for Portugal, Ireland, Greece, and Spain, the least economically robust members of the eurozone) to not request a bailout. Here's a look at the financial rescue packages for each nation.

#5 Iceland, $4.6 billion

Iceland was the first European country to fall in the global financial crisis. When three Icelandic banks collapsed in 2008, the government had few options other than to also become the first European country to receive a bailout. The IMF loaned it $2.1 billion and neighboring Scandinavian countries - Denmark, Finland, Norway, and Sweden - provided another $2.5 billion.

Before the collapse, Iceland had been the world's fourth richest nation. It was declared one of the best countries in the world to live in, according to the United Nations. But deregulation of the financial system allowed risk-taking with little government oversight. Then its banks collapsed and were nationalized and its currency rapidly lost value.

Like many European countries, Iceland is now operating under a strict austerity budget and is struggling to foster growth while also cutting costs and restore financial trust - in 2010, its loans were temporarily frozen when it refused to repay the British and Dutch governments for money those nations' citizens lost in Iceland's banking collapse.

#4 Greece, $142 billion

Greece, long considered the "Achilles heel" of the eurozone, was the first eurozone member (ever) to receive a bailout specifically from the European Union (Iceland was bailed out by the IMF). When the prospect of a bailout was first discussed, its budget deficit - $419 billion, or 12.7 percent of its total budget - was four times the limit permitted for eurozone countries, and concern over its financial health was dragging down the value of the euro. EU leaders were divided over whether to bail out Greece or wait and see if the nation's own spending cuts and financial reforms were able to chip away at the deficit.

In the end, Greece received a $142 billion bailout in May 2010, with about $80 billion of that coming from the eurozone members. The rest came from the IMF. The bailout came with instructions to implement serious austerity measures.

Greece's debt crisis raised concern about three other European countries with lagging economies: Portugal, Ireland, and Spain. …

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