Sunday

28th Aug 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.

Italy earthquake is test for Renzi

Italian prime minister is expected to present a quick reconstruction plan and request more budget flexibility from the EU after this week's tragic earthquake.

News in Brief

  1. Hungary plans to reinforce border fence against migrants
  2. France's highest court suspends burkini ban
  3. Greeks paid €1bn more in taxes in June
  4. Greek minister denounces EU letter on former statistics chief
  5. Turks seeking asylum in Greece may cause diplomatic row
  6. Merkel becomes digital resident of Estonia
  7. Report: VW will compensate US dealers with €1bln
  8. EU mulls making Google pay news media for content

Stakeholders' Highlights

  1. GoogleBrussels - home of beer, fries, chocolate and Google’s Public Policy Team - follow @GoogleBrussels
  2. HuaweiSeeds for the Future Programme to Bring Students from 50 countries to China for Much-Needed ICT Training
  3. EFASpain is not a democratic state. EFA expresses its solidarity to Arnaldo Otegi and EH Bildu
  4. UNICEFBoko Haram Violence in Lake Chad Region Leaves Children Displaced and Trapped
  5. HuaweiMaking Cities Smarter and Safer
  6. GoogleHow Google Makes Connections More Secure For Users
  7. EGBAThe EU Court of Justice Confirms the Application of Proportionality in Assessing Gambling Laws
  8. World VisionThe EU and Member States Must Not Use Overseas Aid for Promoting EU Interests
  9. Dialogue PlatformInterview: "There is a witch hunt against the Gulen Movement in Turkey"
  10. ACCAACCA Calls for ‘Future Looking’ Integrated Reporting Culture With IIRC and IAAER
  11. EURidNominate Your Favourite .eu or .ею Website for the .EU Web Awards 2016 Today!
  12. Dialogue PlatformAn Interview on Gulen Movement & Recent Coup Attempt in Turkey