ECB Should Buy Portuguese and Irish Debt, Cavaco Silva Says

The European Central Bank should follow through on recent pledges by President Mario Draghi and start buying Portuguese and Irish government debt, Portugal’s President Anibal Cavaco Silva said.

“Why not have the ECB start applying now the orientation announced by its president to public debt securities from Portugal and Ireland,” Cavaco Silva said in a message posted on his Facebook page today, referring to Draghi’s pledge to buy government bonds in tandem with the euro region’s rescue fund.

The ECB is stepping up its crisis response in a bid to lower Spanish and Italian bond yields and to prevent the sovereign debt crisis from spreading further. For Portugal, one of five states in the single-currency area to seek external aid, a bond-buying scheme may help the government fulfill its aim of returning to markets next year. The yield on Portugal’s 10-year bonds is hovering around 10 percent.

“Any intervention from the European Financial Stability Facility and the ECB, even on a small scale, could have an important psychological effect and pull borrowing costs to still more manageable levels,” Sarah Hewin, head of research in Europe for Standard Chartered Plc, said by e-mail.

“On the other hand, Portugal will probably prefer to escape the stigma of being under a bailout program if it possibly can, so would hope to do without further EFSF and ECB support,” she said.

Cavaco Silva said there should be no more delays in “clarifying the support mechanisms to countries that face greater difficulties in the markets,” adding that no more room for maneuver should be given to those that “bet on the dismemberment of the euro zone.”

To contact the reporter on this story: Henrique Almeida in Lisbon at

To contact the editor responsible for this story: Jerrold Colten at

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