Portugal announced that it has reached an agreement with the EU/IMF for a €78bn bailout spread over three years. The plan will include €12bn in financial support for the Portuguese banking sector as well as pension cuts, but it is not expected to reduce the minimum wage or cut education or healthcare spending.
The deal also gives Portugal more time to reduce its deficit than was previously planned. The government will have to cut its deficit to 5.9% of GDP, from 9.1%, by the end of the year and to 3% by 2013. Details on the interest rate and on the source of the bailout funds have not been announced. Both decisions are expected to be made soon.
José Sócrates, caretaker Portuguese Prime Minister, suggested that the EU/IMF had recognised that “the situation in Portugal is far from being as serious as in other countries”, a sentiment with which we in Ireland are familiar!