Portugal reached a Deal with European Union & the IMF on €78-billion 3-year Bailout

Portugal reached a deal with the European Union and the IMF on 3 May 2011 on a €78-billion 3-year bailout. Portugal’s Prime Minister Jose Socrates announced the deal is worth 78 billion euros. Portugal became the third euro zone member to strike such deal after Greece and Ireland and secure an international rescue package.

The deal will need broad cross-party support due to the collapse Socrates’ government in Portugal in April 2011 thereby pushing up borrowing rates and forcing Lisbon to seek a bailout. It essentially means that the winner of a June 5 snap general election will implement it. Any of the bailout terms that need parliamentary approval will have to be passed after the general election.
Prime Minister of Portugal, Socrates is of the opinion that Portugal has obtained a good deal as the deal terms favour and defend Portugal’s interests. The terms would be less onerous than those set for Greece and Ireland.

The deadline for meeting Portugal’s budget deficit goals will be extended and 2011’s target was raised to 5.9% of gross domestic product from 4.6% previously. The budget deficit has be cut to 4.5% of GDP in 2012 and 3% in 2013. The country held on 4 May 2011 a treasury bill auction to issue up to €1 billion of 3-month bills.

The interest rate on Portugal’s bailout loan is expected to be set at a meeting of eurozone finance ministers in mid-May. Portuguese agreement to the loan terms will be needed by 15 June 2011 when Lisbon needs to redeem €4.9 billion of bonds.

The deal which has been endorsed by the main opposition parties, means some of Portugal's controversial austerity measures can be scaled back.