Details of the 78 billion euro bailout for Portugal

Below is a PDF copy of the Portuguese Memorandum of Understanding for the EU – IMF bailout. Portuguese interest rates have fallen somewhat on the news of the bailout, to the lowest levels in fifth months.

Key Terms:

  • Money: The EU and IMF will provide funds as loans with maturity to 2013. In exchange, Portugal will see to the following:
  • Fiscal consolidation: Cut budget deficit faster than previously outlined. it must be lowered to 4.5 percent of GDP in 2012 and 3 percent in 2013. However, Portugal ‘s 9.1 percent deficit missed last year’s budget deficit target. So this year’s original 4.6 percent target was raised it to 5.9 percent of GDP.
  • Freeze spending: Freeze public sector wages and pensions until the end of 2013 and reduce the number of civil servants by 1% in 2012 and 2013. Freeze all existing tax benefits. Imposing a cap on health, education and housing allowances and personal income tax. Put on hold Lisbon’s new international airport, and a proposed high-speed rail link between Lisbon and Oporto until after 2013,
  • Asset sales: Sell government stakes in companies like TAP, the national airline, Galp, the oil company, EDP, the utility company; and REN, the electricity operator, and BPN, the failed Portuguese bank.
  • Bank stabilisation: Pump €12bn into Portuguese banks to boost core tier one capital levels from 8pc to 10pc over 18 months.

Full memorandum embedded below.

Comments are closed.

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More