Is Portugal Next?

Wednesday, 13 April 2011 07:12

Former Portuguese PM has outlined a aid package to Portugal of over 80 billion euros, but it will only be paid after a June 5th election.

The issue is that there is no provision for short-term financing arrangements under the present rescue funding agreed among European partners. Portugal needs a bridging loan to get the government through to June 15, when it must repay some 5 billion euros.

Both the EU and the IMF have indicated that Lisbon will have to implement more public spending cuts, tax rises and far-reaching privatization to secure its bailout. Portugal is battling a debt crisis that has already seen Greece and Ireland secure deals for EU/IMF bailouts worth nearly 200 billion euros.

Most believe Lisbon must have the EU-IMF loans agreed before the key June 15 redemption date if it is to avoid default. The plan which was the Portuguese government's fourth in less than a year was aimed at preventing Portugal from becoming yet another country after Greece and Ireland in Euroland to ask for a bailout from the EU and the IMF.