Portugal Bailout: EU Approves $110 Billion Package

BRUSSELS (AP, By Gabriele Steinhauser) -- European finance ministers on Monday signed off on euro 78 billion ($110 billion) in rescue loans to Portugal to give the debt-ridden country time to overhaul its economy.

One-third of the package will be financed by other eurozone states, another third will come from a fund backed by the EU budget, and the International Monetary Fund will contribute the final euro26 billion, the ministers said in a statement from Brussels, where they were meeting.

The statement also said that the Portuguese authorities agreed to "encourage" private investors to maintain their exposure to the country "on a voluntary basis" and not pull out funds. That was a key demand from Finland, which had a hard time getting approval for the rescue package from its parliament.

European officials could not immediately explain how private investors could maintain their exposure in practice, since the bailout program was supposed to keep Portugal out of international debt markets for about two years.

It could mean that investors make a commitment to continue buying short-term treasury bills during the bailout period. Greece, for instance, has continued to issue short-term debt over the past year, after being granted euro110 billion in rescue loans. For the Greek bailout, large multinational banks were also asked to support their Greek subsidiaries.

Approval from finance ministers was expected, after the Finnish parliament dropped its resistance, and many of the broad details of the program had already been revealed over the past weeks.

A European official previously said the average maturity of the rescue loans will be 7 1/2 years -- like the bailouts for Ireland and Greece -- and come at an interest rate of around 5.7 percent. That's lower than the rate Ireland has to pay for its bailout.

Comments

[hairydodger]

01:55 AM on 05/17/2011

I can't help but wonder how this would be if they hadn't made The European Union?

[nopilikia]

12:30 AM on 05/17/2011

This is what happens when countries buy Wall Street banksters "AAA" rated crap......bailout, after bailout, after bailout.................

[becky bradshaw]

09:48 PM on 05/16/2011

The European Union (EU) closely resembles the United States in 1850, more a collection of states than a single country. The U.S. transferred most authority to Washington during, and after, the Civil War. The EU will follow this path over the next 5-20 years.

It is only a coincidence that the conquering states are the northern states in both cases.

Reference: http://federalism-in-the-united-states.co.tv/

[Under Fed yet Fed Up]

09:43 PM on 05/16/2011

The Eurpopean Union was a fearsome financial entity just a few short years ago. The only reason the US markets haven't totally collapsed is that the EU markets have proven to be even shakier than those in the US.

Instead of a race to see who is fastest, it's become a race to see who isn't going backward the fastest.

[lightningbolt]

04:45 PM on 05/16/2011

Bailouts are not the answer!  Increase taxes on the rich!

[lightningbolt]

04:44 PM on 05/16/2011

As expected, instead of increasing taxes on the rich, public money from other countries will be used to pay the debts of Portugal's incompetent government.

[AyeChart]

04:06 PM on 05/16/2011

Ireland, Greece, Portugal--but who's going to bail out the USA?

Shouldn't we stop this bus that is being driven over the cliff by Obama?

Stop spending.

STOP SPENDING!

STOP SPENDING!

Oh, I forgot.  Gotta be polite.  Really.  Please stop spending.

[hairydodger]

02:00 AM on 05/17/2011

It's not about spending. It's about income. We can raise the income of the USA and don't. How come? An equitable tax on the wealthy is more than fair. We're all better off when we're all better off. Tell that to your republican friends.

[BeautifulWorld]

11:16 AM on 05/17/2011

"How come?"

Because there is no legal basis to do so.

Please take a course in grammar.

[tvhatic]

09:27 AM on 05/17/2011

We won’t ever have to be bailed out. The US government’s debt is in dollars, which it has the sole ability to produce. China cannot come here and demand Alaska, or lake Michigan for the trillions in T-securities they have, they only get our fiat currency of dollars

We are not Greece, which uses the Euro and cannot control it. It is more appropriate to think of the EU debt problems as state budget problems, not federal.