EU and IMF rescue Portugal with a cash injection of €78 bn

“Portugal has reached a deal on a bailout programme for the country’s economy with the European Union (EU) and the International Monetary Fund (IMF),” PM Jose Socrates said on Tuesday evening. Under the agreement, the distressed country will get €78 bn within three years, undertaking a commitment to reduce its budget deficit from 9.1% to 5.1% of GDP this year, to 4.5% in 2012, and below the EU 3% limit in 2013. Thus, Portugal turns out to be the Eurozone country rescued most cheaply after Ireland received €85 bn and Greece agreed a bailout of €110 bn.

Socrates welcomed the bailout package as a victory, underlining that the terms of Lisbon's loan were more favourable than those imposed on Athens and Dublin. “The EU and the IMF admitted that the situation in Portugal is far less serious than in the other countries,” said the Portuguese Prime Minister. According to him, the programme has not imposed new measures for saving money this year, nor an immediate reduction of the lowest pensions or salaries in the public sector. “The lowest pensions will even be increased in order to help the Portuguese people,” added Socrates.

The Portuguese society was haunted by fears that an eventual bailout package would increase poverty in the poorest Western European country.

The rescue programme is to be voted on May 16 by the finance ministers of EU member-states. One-third of the money is to be allocated by the IMF. The Portuguese Government press office specified that the aggregate financial assistance would be extended in three years and includes financial support for the country’s banking system.

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