Lisbon (AFP) - Portugal is now the third country of the eurozone to rescue crutches, with opposition warning Wednesday it will go hand in hand with a EU deal and of EUR 78 billion IMF to avoid debt default.
"The Government has reached a good agreement which defends the Portugal," outgoing Prime Minister Jose Socrates announced on television late Tuesday, but the country received a rough ride Wednesday, when he had to pay a significantly increased rate to borrow money.
A deadline looms on 15 June, six weeks, when the Portugal must buy back old loans of nearly 5 billion euros ($7.3 billion) and avoid default. The country has now joined the Greece and Ireland as members of the eurozone on the support of the financial life of the EU, the ECB and the IMF.
Socrates has reported that in a sense the terms of the agreement give Portugal some extra breathing space.
He said that the deal 116 billion "" is a three-year program which sets more gradual reduction of deficit targets: 5.9% this year, 4.5 per cent in 2012 and three per cent in 2013. ""
The Portugal a previous target of 4.6% this year, 3.0% in 2012 and 2.0% in 2013. The EU ceiling is 3.0%.
Experts of the Monetary Fund International, the European Union and the European Central Bank met the conservative opposition parties Wednesday to obtain their support for the rescue conditions if they win an early election on 5 June.
The opposition has precipitated the election in March, in dismissing the additional cuts to combat the mountain of 54.5 billion euros of debt of the Portugal - a value - almost a year of leaving the country while it is mainly because the Government austerity on lawmakers without consultation.
The main opposition and the center-right social democratic party chief Pedro Passos Coelho marked that he favoured the rescue plan.
"The PSD said since the beginning, that it would not let the country go bankrupt, and I hope that this aid will come soon," Coelho told journalists.
However, he said that the party could announce a final position later after studying the details of the Pact negotiated by the outgoing Government.
International negotiators were talking to the media on Thursday morning.
According to the text of the agreement published in the Portuguese media, additional budgetary savings of EUR 8.8 billion are in 2012 and 2013.
Increase in the income tax, sales tax would increase on some products, higher pensions would be reduced and the duration and the amount of the unemployment benefit would be deleted.
The next Government would also reform labour markets and the energy and lift the privatization of State assets EUR 5.5 billion.
Portugal would have to pay interest on the money to rescue two percentage points above the rate paid by the European institution for financial stability, which would mean 4.68%, and the borrowed EUR 12.0 billion would be used to strengthen the banks.
In this fevered climate, the Portugal took place with an operation to raise funds for three months, loan if billion euros, but has had to pay interests of 4.652%, significantly more than 4046% in the last issue also made April 20.
On existing debt market, performance, or the rate of 10-year bonds eased 9.333 9.411% % at the close on Tuesday.
In London, analyst of Capital Economics Jonathan Loynes, noting the fall, said that the markets had given a "positive" response to the agreement, but that the rescue plan was "very unlikely to mark the end to the problems of the country."
Barclays Capital, European Chief Economist Julian Callow agreed that the initial market response had been positive.
"The concerns that are out there... on Europe's ability to deal with issues that exist in particular parts of Europe are supported by programmes such as that which has just been agreed...," he told AFP.
"It removes some downside risks to the assessment of the risks of the people."
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