26th Oct 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.

Stakeholders' Highlights

  1. EU-China ForumDebating the Future of the EU-China Relations on 28 November in Prague
  2. COMECEMigrants: From Fear to Compassion
  3. Birdlife EuropeBusiness as Usual - Juncker Snubs Environment and Protects Broken CAP
  4. EFADraft Bill for a 2nd Scottish Independence Referendum
  5. UNICEFCalls on European Council to Address Plight of Refugee and Migrant Children
  6. ECTAJoin us on 9-10 November in Brussels and Discover the new EU Digital Landscape
  7. Access NowCan you Hear me now? Verizon’s Opportunity to Stand for Global Users
  8. Belgrade Security ForumMeaningful Dialogue Missing Not Only in the Balkans, but Throughout Europe
  9. EuropecheEU Fishing Sector Celebrates Sustainably Sourced Seafood in EU Parliament
  10. World VisionWomen and Girls Urge EU Leadership to Help end Gender-based Violence
  11. Belgrade Security ForumGet the Latest News and Updates on the Belgrade Security Forum @BelSecForum
  12. Crowdsourcing Week EuropeMaster Crowdsourcing, Crowdfunding and Innovation! Conference 21 November - 10% Discount Code CSWEU16