Portugal agrees 'good deal' on €78bn bailout

Portugal has agreed a three-year, €78bn (£70bn) bailout from the EU and IMF, the country's caretaker prime minister, Jose Socrates, said.

Mr Socrates' government collapsed last month, sparking a sharp rise in borrowing costs which forced Lisbon to seek a bailout – the third eurozone country after Greece and Ireland to do so. The prime minister, who faces a parliamentary election on 5 June, hailed the package as a victory, saying it included more lenient terms than those imposed on Greece and Ireland as the deal gave Portugal more time to meet budget goals which it had previously agreed.

"The government has obtained a good deal. This is a deal that defends Portugal," he said, although he added: "There are no financial assistance programmes that are not demanding."

He said Portugal would now need to cut its budget deficit to 5.9 per cent of gross domestic product this year, compared with a previous goal of 4.6 per cent. The deficit will have to be cut to 4.5 per cent in 2012 and to 3 per cent in 2013. The deal is, however, yet to be put to the opposition parties. The opposition Social Democrat leader Pedro Passos Coelho said earlier he was ready to meet the lenders.

The reaction from the financial markets was cautious. Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto, said: "He [Mr Socrates] showed us the bright side of the moon. It is the dark side that remains to be seen, and that includes the interest rate."

An EC source said what was presented was what had already been agreed. The source said the interest rate on the loan would be decided at a meeting of eurozone finance ministers in mid-May, when the bailout is expected to be approved.

Agreement is needed by 15 June, when Portugal has to meet a bond redemption of €4.9bn. A newly elected government after the June election will have to enact the terms of the bailout. Mr Socrates added, however, that the loan agreement would not require any changes to the constitution.

Start your day with The Independent, sign up for daily news emails
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Digital Optimisation Executive - Marketing

£30000 - £35000 per annum: Recruitment Genius: The UK's fastest growing, multi...

Recruitment Genius: Financial Reporting Manager

£70000 - £90000 per annum: Recruitment Genius: A Financial Reporting Manager i...

Recruitment Genius: Payments Operations Assistant

£23000 - £25000 per annum: Recruitment Genius: They win lots of awards for the...

Recruitment Genius: Telephone Debt Negotiator

£13500 - £20000 per annum: Recruitment Genius: This nationwide enforcement com...

Day In a Page

Sepp Blatter resignation: The beginning of Fifa's long road to reform?

Does Blatter's departure mean Fifa will automatically clean up its act?

Don't bet on it, says Tom Peck
Charles Kennedy: The baby of the House who grew into a Lib Dem giant

The baby of the House who grew into a Lib Dem giant

Charles Kennedy was consistently a man of the centre-left, dedicated to social justice, but was also a champion of liberty and an opponent of the nanny-state, says Baroness Williams
Syria civil war: The harrowing testament of a five-year-old victim of this endless conflict

The harrowing testament of a five-year-old victim of Syria's endless civil war

Sahar Qanbar lost her mother and brother as civilians and government soldiers fought side by side after being surrounded by brutal Islamist fighters. Robert Fisk visited her
The future of songwriting: How streaming is changing everything we know about making music

The future of songwriting

How streaming is changing everything we know about making music
William Shemin and Henry Johnson: Jewish and black soldiers receive World War I Medal of Honor amid claims of discrimination

Recognition at long last

Jewish and black soldiers who fought in WWI finally receive medals after claims of discrimination
Beating obesity: The new pacemaker which helps over-eaters

Beating obesity

The new pacemaker which helps over-eaters
9 best women's festival waterproofs

Ready for rain: 9 best women's festival waterproofs

These are the macs to keep your denim dry and your hair frizz-free(ish)
Cycling World Hour Record: Nervous Sir Bradley Wiggins ready for pain as he prepares to go distance

Wiggins worried

Nervous Sir Bradley ready for pain as he prepares to attempt cycling's World Hour Record
Liverpool close in on Milner signing

Liverpool close in on Milner signing

Reds baulk at Christian Benteke £32.5m release clause
On your feet! Spending at least two hours a day standing reduces the risk of heart attacks, cancer and diabetes, according to new research

On your feet!

Spending half the day standing 'reduces risk of heart attacks and cancer'
With scores of surgeries closing, what hope is there for the David Cameron's promise of 5,000 more GPs and a 24/7 NHS?

The big NHS question

Why are there so few new GPs when so many want to study medicine?
Big knickers are back: Thongs ain't what they used to be

Thongs ain't what they used to be

Big knickers are back
Thurston Moore interview

Thurston Moore interview

On living in London, Sonic Youth and musical memoirs
In full bloom

In full bloom

Floral print womenswear
From leading man to Elephant Man, Bradley Cooper is terrific

From leading man to Elephant Man

Bradley Cooper is terrific