Would make sense for Portugal to seek aid: Nowotny

It would make sense for Portugal to seek aid from the European Union bailout fund, although such a decision will be caught up in domestic politics, European Central Bank Governing Board member Ewald Nowotny said.

Portugal's Premier Jose Socrates submitted his resignation last week after parliament rejected austerity measures proposed by his minority Socialist government to try to avert a bailout.

"Today we see that unfortunately the domestic political situation in Portugal has clearly worsened," Nowotny told Austrian broadcaster ORF on Sunday.

"The head of the government has stepped down. Portugal certainly has a problem in terms of competitiveness," he said, noting Lisbon needs to refinance billions of euros of debt.

"From a purely economic point of view one could probably recommend it," he said, when asked if Portugal should seek an EU bailout. "But as you know economic policy is also politics and in Portugal it's very much about domestic politics."

Portugal is widely expected to be the next euro zone domino to fall after Ireland and Greece, but a decision on what it might do may take weeks, if not months, because of the upheaval.

ORF said Eurogroup Chairman Jean-Claude Juncker had estimated Portugal could need up to 75 billion euros in aid. Asked whether he agreed, Nowotny said he could not give an estimate but that this was "no completely unrealistic sum."

HEADING BACK TO "NORMAL"

On Greece, Nowotny said there were a range of risks to its recovery which were being reflected in the markets.