Eurozone member Portugal’s interim government reached a “good agreement” on a three-year 78 billion euro (US$115.5 billion) bailout package from the EU and IMF, outgoing Portuguese Prime Minister Jose Socrates said.
“I would like to announce to the Portuguese people that the government has reached agreement today with the representatives of international institutions on the program of financial aid to our country,” Socrates said on Tuesday.
“The government has reached a good agreement that defends Portugal,” he said in a televised address.
His office later said that Portugal was seeking 78 billion euros in foreign assistance under the program.
Officials from the “troika” of the European Central Bank, the EU and the IMF have been in Lisbon for two weeks negotiating the terms of the financial rescue package.
Socrates said the plan called for a loosening of the deficit reduction targets for Portugal, whose economy is expected to shrink this year as it implements austerity measures.
“It is a three-year program which sets more gradual deficit reduction targets: 5.9 percent this year, 4.5 percent in 2012 and 3 percent in 2013,” the prime minister said.
But he did not give details about how this would be implemented, saying he needed “consultations” with opposition parties.
Lisbon was forced to ask for a bailout last month after Socrates’ government resigned following a parliamentary dispute and the rejection of a fourth round of austerity measures sent its borrowing costs prohibitively higher.
Lisbon has to have the bailout package in place by June 15, when it must repay nearly 5 billion euros in maturing debt.
However, the IMF stressed late on Tuesday that the pact would have to be approved by the main opposition parties.
“We have said from the beginning that it is important that any program should have broad cross-party support and we will continue our engagement with the opposition parties to establish that this is the case,” a spokesman said.
Portugal is the third eurozone member to seek international assistance following Greece’s 110 billion euro rescue one year ago and Ireland’s 85 billion euro bailout in November.
Lisbon had previously aimed to reduce its public deficit to 4.6 percent of GDP this year, 3 percent next year and 2 percent in 2013.
These targets were put in doubt when the national statistics office announced last month that the public deficit last year came in at 9.1 percent of GDP, above the government’s target of 7.3 percent.
EU rules require the bloc’s 27 member states to keep their deficits below 3 percent, although nations may be permitted some leeway during an economic crisis.
Portugal’s public debt totals nearly 160.4 billion euros, or 93 percent of GDP.
The quick agreement of the terms of the rescue package means that eurozone finance ministers will be able to review the plan at their regular monthly meeting on May 16.