Portuguese PM says he's secured better bailout terms than Ireland
Published 04/05/2011 | 05:00
PORTUGAL'S prime minister last night claimed he had agreed his country's €78bn bailout deal with the EU/IMF on more lenient terms than those imposed on Ireland and Greece.
Jose Socrates hailed the package as a victory, saying the deal gave Portugal more time to meet budget goals that it had agreed to previously.
Mr Socrates' government collapsed last month, sparking a sharp rise in borrowing costs which forced Lisbon into becoming the third eurozone country to seek a bailout after Greece and Ireland.
Mr Socrates now faces a snap parliamentary election on June 5.
"The government has obtained a good deal. This is a deal that defends Portugal," Mr Socrates said.
He provided few details of what terms the bailout included, saying only that "there are no financial assistance programmes that are not demanding".
Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto, said: "He showed us the bright side of the moon, it is the dark side that remains to be seen, and that includes the interest rate."
Mr Socrates said Portugal would now need to cut its budget deficit to 5.9pc of gross domestic product this year, compared with the government's previous goal of 4.6pc.
The deficit will have to be cut to 4.5pc in 2012 and 3pc in 2013.
The deal is expected to be approved at a meeting of eurozone finance ministers in mid-May, in time for the EU rescue fund to raise money for Portugal by June 15, when the country needs to meet a bond redemption of €4.9bn.
Earlier, the Irish Government promised the IMF that it would launch a new crackdown on social welfare fraud and raise the retirement age to meet its bailout targets.
The revised agreement -- negotiated by the new Government -- contains a commitment to tighten up social welfare schemes which are "susceptible to abuse" or contributing to "poverty or inactivity traps".
The Department of Social Protection is to come up with a programme of reforms by March of next year to "better target social support to those on lower incomes and ensure that work pays for welfare recipients".
And the revised agreement contains a commitment to increase the retirement age in an attempt to reduce the future cost of the pension bill.
The age for claiming the state pension will rise from 65 at present to 66 in 2014, to 67 in 2021 and to 68 in 2028. This means that everyone now under the age of 49 will have to work until they are 68 before they can draw the state pension.
The IMF-EU had emphasised the need for the Government to tackle the "sheltered sectors" in the economy.
Bailout update: Business P45