Sunday

11th Jun 2023

Lisbon, troika agree details of €78bn bail-out

  • The Vasco de Gama bridge near Lisbon: Socrates has won a more lenient schedule for deficit reduction (Photo: F H Mira)

Portugal's caretaker administration has reached an agreement with the troika of the European Commission, the European Central Bank (ECB) and the International Monetary Fund for a three-year €78 billion bail-out.

Prime Minister Jose Socrates made the announcement via televised address after three weeks of negotiations with officials from the international lenders.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

In return for the loan, Lisbon has had to agree to austerity measures similar to those rejected by parliament last month, which precipitated the downfall of Socrates' centre-left minority government and caused snap elections.

The deal will include cuts to pensions, but the minimum wage, health care and schools will be unaffected, according to local media reports. The retirement age will also remain the same.

Crucially, the deal wins a longer period to reach its deficit reduction targets than had previously been envisaged.

Portugal must cut its deficit to 5.9 percent of GDP by the end of 2011, then down to 4.5 percent in 2012 and three percent in 2013. The government's earlier schedule committed to cutting the deficit to 4.6 percent this year, to three percent in 2012 and to two percent in 2013.

It is unclear whether the agreement will include support for the country's banks.

Socrates declared the package a good, but demanding deal. "The government has reached a good agreement that defends Portugal," he said.

"Naturally, there are no financial assistance programs that are not demanding," he continued. "The times we live in continue to imply efforts and a lot of work."

He also said that further pay cuts in the public sector had been ruled out.

Opposition parties have yet to sign off on the deal, however.

The commission and the ECB have insisted that centrist partiesmust back any agreement even though they are in the middle of an election campaign, so that they can be held to its terms whatever the make-up of the future government.

The opposition Social Democrats - political conservatives despite their name - have said they are ready to meet with the troika to consider the package.

However, the latest polls suggest that neither the Socialists of Socrates nor the Social Democrats can win an outright majority, so that the make-up of the new parliament may be little different to the assmebly as it stood befeore th snap vote.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Opinion

The 'BlackRock exemption' has no place in the EU's due diligence directive

With the EU's Corporate Sustainability Due Diligence Directive, there's an opportunity to harness the power of investment for truly sustainable activities. But to do this, it must not allow the 'BlackRock exemption' and instead cover institutional investors and asset managers.

Final push for EU-Mercosur deal, amid deforestation fears

Finalising the EU-Mercosur agreement is a priority for the EU and the upcoming Spanish EU council presidency, ahead of the summit with Latin America and the Caribbean countries to be held in Brussels on 17 and 18 July.

Latest News

  1. Negotiations on asylum reform to start next week, says MEP
  2. EU gig workers compromise dubbed ‘a disaster for workers’
  3. EU's one-off chance to influence Laos taking over ASEAN chair
  4. Belgian bâtonnier on Russia: 'You can have a client you don't like'
  5. EU's proposed ethics body 'toothless', say campaigners
  6. Study: 90% of Spanish inflation 'driven by corporate profits'
  7. If Spanish economy is doing well, why is Sanchez poised to lose?
  8. EU lawyers for Russia: making 'good' money?

Stakeholders' Highlights

  1. Nordic Council of Ministers20 June: Launch of the new Nordic Nutrition Recommendations
  2. International Sustainable Finance CentreJoin CEE Sustainable Finance Summit, 15 – 19 May 2023, high-level event for finance & business
  3. ICLEISeven actionable measures to make food procurement in Europe more sustainable
  4. World BankWorld Bank Report Highlights Role of Human Development for a Successful Green Transition in Europe
  5. Nordic Council of MinistersNordic summit to step up the fight against food loss and waste
  6. Nordic Council of MinistersThink-tank: Strengthen co-operation around tech giants’ influence in the Nordics

Join EUobserver

Support quality EU news

Join us