Details of the 78 billion euro bailout for Portugal
Below is a PDF copy of the Portuguese Memorandum of Understanding for the EU – IMF bailout. Portuguese interest rates have fallen somewhat on the news of the bailout, to the lowest levels in fifth months.
- Money: The EU and IMF will provide funds as loans with maturity to 2013. In exchange, Portugal will see to the following:
- Fiscal consolidation: Cut budget deficit faster than previously outlined. it must be lowered to 4.5 percent of GDP in 2012 and 3 percent in 2013. However, Portugal ‘s 9.1 percent deficit missed last year’s budget deficit target. So this year’s original 4.6 percent target was raised it to 5.9 percent of GDP.
- Freeze spending: Freeze public sector wages and pensions until the end of 2013 and reduce the number of civil servants by 1% in 2012 and 2013. Freeze all existing tax benefits. Imposing a cap on health, education and housing allowances and personal income tax. Put on hold Lisbon’s new international airport, and a proposed high-speed rail link between Lisbon and Oporto until after 2013,
- Asset sales: Sell government stakes in companies like TAP, the national airline, Galp, the oil company, EDP, the utility company; and REN, the electricity operator, and BPN, the failed Portuguese bank.
- Bank stabilisation: Pump €12bn into Portuguese banks to boost core tier one capital levels from 8pc to 10pc over 18 months.
Full memorandum embedded below.