International Monetary Fund, European Commission and European Central Bank officials will be in Lisbon today as they start preparing an estimated 80 billion- euro ($116 billion) aid program for Portugal, the third euro- region nation to request a bailout in less than a year.
The EU aims to reach an agreement on the aid package on May 16, three weeks before the country’s June 5 early election, which was prompted by the resignation of Prime Minister Jose Socrates after parliament rejected his deficit-cutting plan.
Portugal’s bid for emergency aid last week opened what European officials say will be the final chapter in the debt crisis that erupted in Greece last year, spread to Ireland and triggered speculation that the 17-nation euro area might not survive in its current form.
“It is expected that the program is completed and approved by both the EU and IMF by mid-May 2011 in order to allow the disbursement of the first tranche ahead of the large funding needs of June,” Antonio Garcia Pascual, chief southern European economist at Barclays Capital, said in a note yesterday.
The next government will need “not only to implement further fiscal consolidation measures but also to implement difficult and potentially unpopular structural reforms, which are likely to target a leaner and more efficient public sector, further labor market reforms, and enhanced competition in goods and services markets,” he wrote.
0 comments:
Post a Comment