About €6.1 billion was made immediately available on Friday. The IMF will make a total of €12.6 billion in financing available over 2011. The European Union (EU) will supplement the money with a further €25.2 billion.
In total, international authorities have granted Portugal a bailout package amounting to €78 billion. The IMF predicts the rescue measures will reduce the budget deficit to 3% of GDP by 2013 as well as stabilising public sector debt.
The Portuguese authorities have put forward a program that is economically well-balanced and has growth and job creation at its center,” Acting Managing Director John Lipsky said in the e-mailed statement today. “It addresses the fundamental problem in Portugal - low growth - with a policy mix based on restoring competitiveness through structural reforms, ensuring a balanced fiscal consolidation path, and stabilizing the financial sector.”
The backing for Portugal comes less than two days after the resignation of Dominique Strauss-Kahn as managing director, who was indicted yesterday in New York on charges including attempted rape. French Finance Minister Christine Lagarde emerged as the leading contender to replace him, with officials including Angela Merkel arguing that a European is needed for the job because of the region’s debt woes.
The loan to Portugal has a duration of three years, the IMF said.
“The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track,” the IMF said in the statement.
The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track,” the IMF said in a statement. Of course, under this new agreement, Portugal will have to carry out things like raising taxes, try to enforce a great privatization plan, reform its laboring issues and enforce spending cuts.
“The Portuguese authorities have put forward a program that is economically well-balanced and has growth and job creation at its center. It addresses the fundamental problem in Portugal – low growth – with a policy mix based on restoring competitiveness through structural reforms, ensuring a balanced fiscal consolidation path, and stabilizing the financial sector,” IMF Acting Managing Director John Lipsky said.
Of course, we can all point the finger to our government for getting us into the mess we are in. Since the inception of the U.S., our government has been fighting back and forth across the aisle and I believe that it has finally caught up with us. The United States is still, arguably, the best country to live in but we need to show outsiders that we can take care of our own.
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