EU, IMF: Portugal Bailout Agreement 'Getting Close'

LISBON - Portugal is close to reaching an agreement with the European Union and IMF on a bailout for the debt-laden country and there are no disagreements between the donors, the European Commission and the IMF said on Tuesday.

Portugal's caretaker Prime Minister Jose Socrates was set to make a statement at 1930 GMT, his office said.

Officials from the European Commission, the International Monetary Fund and European Central Bank have been in Lisbon for almost a month to hammer out an agreement with Portugal on a bailout expected to reach about 80 billion euros ($120 billion).

An agreement could come any day, officials have said, but local media have reported that it could be delayed because of disagreements between the European Commission and IMF on the terms of the loan.

EC spokesman Amadeu Altafaj, who is in Lisbon, denied any rifts.

"There has been progress in talks, and we can expect a deal soon. My feeling is that we are getting close to a deal ... There are no divergences among members of the troika," he said.

"Discussions are currently going on and there is good progress, we are getting closer to a staff agreement and we keep a constructive dialogue with the political parties too," he added.

An IMF spokesperson also said there were no divergences between the EC, ECB and the IMF and a deal was close.

Portugal became the third country in the euro zone, after Greece and Ireland, to seek a bailout after its government collapsed in late March and borrowing costs soared.

Officials said the agreement would be presented to Portugal's opposition Social Democrats and the caretaker government soon so that they can commit to the terms of the deal ahead of a snap June 5 general election.

Social Democrat leader Pedro Passos Coelho said he stood ready to meet with the lenders.

The deal is expected to be approved at a meeting of eurozone finance ministers in mid-May, in time for the EU rescue fund to raise money for Portugal by June 15, when the country needs to meet a bond redemption of 4.9 billion euros.

Portuguese media have said the European Commission and the International Monetary Fund diverged over whether Portugal should be given more time to meet its budget deficit targets, as well as on the size of the aid package, which Brussels initially put at around 80 billion euros.

Diario Economico newspaper said earlier Portugal may need over 100 billion euros in EU/IMF loans, including up to 10 billion euros for its banks, but there were doubts whether Brussels will allow the bailout to exceed its initial target.

SIC television said, without citing its sources, the bailout could reach 105 billion euros.

(Reporting by Andrei Khalip; Writing by Axel Bugge; Editing by Louise Ireland)

Copyright 2011 Thomson Reuters. Click for Restrictions.

Comments

[Peanut Santiago]

04:02 AM on 05/04/2011

I was surprised at the idea of the Euro.

The countries each had different cultures, economies, and ways of doing things.
They expected sovereign nations to get along using one currency.

However, the Euro works well when things are looking up financiall­y.

Then an economic crash came.
The bankers and stock market wizards took down the economy with their greed and selfishness by taking unbelievably stupid risks..

After the economic meltdown came the weaknesses of the Euro.
All countries had to obey the rules concerning the Euro and (of course) many didn't.

We all know what finally happened.

The economic meltdown showed the world which countries did NOT play by the Euro rules and got into financial trouble.

Now the stronger, wealthier countries have a HUGE problem....t­he countries in trouble need financial help and the taxpayers in the stronger countries don't want to bail out the countries in trouble.

The Euro works in good economic times but does not do well in the bad times.

IMHO....th­e Euro will not last.
They are trying to hide the truth about the Euro's big problems and it is probably already in deep trouble.

********This post is based on my comment on Greece..

[LMPE]

06:44 PM on 05/03/2011

The Tea Party will now blame this bailout on Obama.