Friday

27th May 2016

Portugal's last bailout loan suspended

  • Lisbon: Portugal's court has been a thorn in the side of Coelho's government (Photo: Marco Fedele)

The conclusion of Portugal's €78 billion EU bailout programme has hit a last minute snag after the EU and the International Monetary Fund (IMF) suspended the country's final €2.6 billion loan.

The move follows a ruling by the Portuguese supreme court last Friday (30 May), which rejected as unconstitutional the government's plans to impose public sector pay cuts worth between 2 and 12 percent, as well as cuts to pensions and welfare benefits.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

The decision leaves the Portuguese government having to explain to its creditors how it will plug a €700 million revenue gap this year before the funds are released to Lisbon.

Although Portugal formally exited its three-year bailout programme at the start of May without requesting any further loans, Prime Minister Pedro Coelho said on Tuesday that the court ruling breached the conditions agreed with the EU and IMF.

"As there was a change in these conditions, now evidently this payment can only take place when this situation is overcome," said Coelho.

He added it was “not possible for the Portuguese state to commit, either to the European Union or the IMF, to its deficit goal of 2.5 per cent in 2015 without being able to respond to these questions.”

For its part, the European Commission has urged the Portuguese government to introduce "replacement measures of equivalent size ... as soon as possible" in its country recommendations report on Monday.

Portugal's supreme court has been a thorn in the side of Coelho's centre-right government throughout the programme, rejecting a series of planned austerity measures.

It has two rulings on other planned measures still pending.

Nato mulls use of new drones near Libya

EUobserver has learned Nato may send powerful new drones near the Libyan coast should it receive permission from Libya's new unity government.

News in Brief

  1. Syrian refugees sue Denmark over immigration law
  2. Ukraine bans Gorbachev for backing Crimea's seizure
  3. Dozens dead in two shipwrecks outside Libya
  4. Slovak PM says his country is no place for Muslims
  5. Juncker's spin-doctor warns of populist 'horror'
  6. EU urges Hungary to end discrimination of Roma children
  7. Majority of voters think UK will stay in EU
  8. Leading MEP says Greek bailout will not work

Stakeholders' Highlights

  1. ACCAEducation and Training 2020 - Giving Young People the Workplace Skills They Need
  2. EPSUTrade Unions Back New Undeclared Work Platform
  3. European Healthy Lifestyle AllianceCould targeting children’s fitness boost academic performance?
  4. World VisionDeclares the World Humanitarian Summit a Positive Step in a Longer Journey to Ending Need
  5. EJCPresident Dr. Moshe Kantor on Brexit and the Jewish Question
  6. Swedish EnterprisesNew rules for posted workers - Better Protection or the End of Posting ?
  7. World VisionWhy The EU Needs to Put Children at the Centre of Emergencies - In Their Words
  8. ACCASustainability Reporting in Danger of Losing Its Momentum Says ACCA and CDSB
  9. Dialogue PlatformDiversity as Heritage of Humanity! Join the “Colors of the World“ Show at the EP
  10. Centre Maurits CoppietersNew Responses to the Basque Peace Process? MEP Juaristi on Stateless Challenges Conference
  11. European Healthy Lifestyle AllianceImproving Cardiovascular Health Begins by Closing the Gap in Sex Disparities
  12. IPHRBrussels Talks to Take Stock of Human Rights in Turkmenistan

Latest News

  1. EU and US threaten to increase Russia sanctions
  2. Nato mulls use of new drones near Libya
  3. Why countries are not rushing to join Putin's union
  4. G7 warns Brexit could hurt global growth
  5. Perceptions over South China Sea dispute are simply wrong
  6. Tech companies eye opportunites in refugee crisis
  7. EU commission reshuffles car emissions expert
  8. Poland's economy feels the heat of rule of law talks