BEIJING (MNI) – Portugal should decide soon whether or not it will
ask for financial assistance from the eurozone’s crisis fund, Austrian
Finance Minister Josef Proell told the Financial Times in an interview
published Friday.

Proell also said that Ireland needed to make additional budget cuts
to have the interest rate on its aid package reduced.

Proell’s comments come ahead of a weekend meeting of European Union
officials at which they will debate an expansion of the financial
stability mechanism set up to deal with debt crises among some of the
region’s member states.

Austria, Germany, Finland and some other northern European
countries are insisting on stricter fiscal discipline as a pre-condition
for agreeing to additional aid. The nations hit hardest by the crisis
are pushing back, arguing that additional fiscal consolidation would
erode their competitiveness and so worsen their already dire economic
situations.

Proell stressed that further fiscal discipline was needed to
reassure financial markets.

“This is a crisis of sovereign debt in some countries. The markets
don’t trust the politicians’ will or ability in some of our member
countries and therefore we need more discipline.”

Proell admitted no one could force Portugal to seek early
assistance from the E440 billion European Financial Stability Facility.
But he warned that delay in seeking help could risk a much bigger and
more complicated financial rescue.

“… my signal to Portugal is to look at Greece and Ireland: don’t
be too late. Make your decision soon: yes or no,” he said.

“If the concrete numbers in Portugal say that they cannot refinance
the country in the next years without help, then they should very soon
take advantage of the [EFSF] umbrella. But, as I said, we cannot force
them, that’s the reality.”

Proell also made clear he was open to lower the interest rate on
Ireland’s bailout package, but only if further budget cuts were made.

“If Ireland comes up with a proposal to reduce their interest rate,
the other question will be what can they do more at a national level to
reduce their debt and deficit,” he said. “But simply to demand ‘reduce
our interest rate’ is just not enough.”

Proell also indicated that he was willing to consider lengthening
the maturity of International Monetary Fund/European Union loans to
Greece if the Greek government maintined its committment to budget cuts.
He also expressed concern about allowing the EFSF to buy bonds of
troubled governments or to fund their bond buy-backs.

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