Portugal is now the third eurozone debt rescue case, with an EU-IMF bailout of 78 billion euros to avoid default, but the conditions as well as the key reaction of opposition parties remain unclear.
'The government has reached a good agreement that defends Portugal,' outgoing Prime Minister Jose Socrates announced on television, but the country got a rough ride on Wednesday when it had to pay sharply increased rates to borrow money.
A deadline looms on June 15, six weeks away, when Portugal must redeem old loans of nearly 5.0 billion euros ($7.3 billion) and avert default. The country now joins Greece and Ireland as eurozone lame ducks on bailout crutches held out by the EU, ECB and IMF.
The experts from the three institutions were meeting opposition right-wing parties on Wednesday to obtain their support for the corrective measures which condition the bailout if they win an early election on June 5.
The International Monetary Fund, the European Central Bank and the European Union had taken care to include the main opposition parties in their consultations leading up to the agreement.
In this fevered climate, Portugal went ahead with an operation to raise funds for three months, and did borrow 1.117 billion euros ($1.65 billion) but had to pay interest of 4.652 per cent, sharply up from 4.046 per cent when the last such issue was made on April 20.
At Carregosa Bank, bond strategist Filipe Silva said: 'There is no doubt that the rate is very high for such a short-dated issue.'
Socrates announced the deal late on Tuesday after long negotiations with auditors from the three external bodies.
Source: New Age
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