EU-IMF: $110 Billion for Portugal

May 17th, 2011
in econ_news

Portugal flag Econintersect:   Portugal will pay an average interest rate of about 5.1 percent on the 78-billion-euro ($110-billion) EU-IMF bailout agreed, its finance minister said.

"The interest rate will depend on market conditions," Fernando Teixeira dos Santos was quoted by the Lusa agency as saying in Brussels.

Under current conditions, the average rate would vary between 5.0 percent in the first three years and 5.2 percent in following years, he said, adding that Portugal was to receive a first payment of 18 billion euros by the end of May or beginning of June.

Follow up:

European finance ministers on Monday backed a three-year 78-billion-euro EU-IMF bailout for Portugal on condition Lisbon embarks on a major raft of public sell-offs.

The ministers agreed unanimously to rescue Portugal, a statement said, making it the third eurozone country in the space of one year to receive a multi-billion-euro bailout after Greece and Ireland.

According to Reuters:

Ministers endorsed the agreement on a three-year joint EU/IMF financial assistance program that is both ambitious and frontloaded, while safeguarding the most vulnerable groups in society.

It will be based on three pillars:

- An ambitious but credible fiscal adjustment to restore fiscal sustainability, including through the correction of the excessive deficit by 2013 respecting the original deadline set by the Council. Fiscal sustainability will be supported by (i) a strengthening of the budgetary processes, including enhanced monitoring and reporting, more efficient revenue administration and better control over PublicPrivate-Partnerships and State-Owned Enterprises; (ii) reforms of the health system and of public administration; (iii) an ambitious privatization program.

- Growth and competitiveness enhancing reforms of the labor market, the judicial system, network industries and housing and services sectors, to foster sustainable and balanced growth and the unwinding internal and external macroeconomic imbalances.

- Measures to ensure a balanced and orderly deleveraging of the financial sector and to strengthen the capital of banks, including adequate support facilities.

Sources:  Yahoo News and Reuters

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