Portugal begins talks on bailout terms

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Portugal begins talks on bailout terms

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Portugal is beginning tricky talks with European and IMF officials on the terms of its proposed financial bailout.

The government of prime minister José Socrates fell last month when parliament rejected the latest austerity plan.

It is the eurozone’s third bailout following plans for Greece and Ireland.

“The idea that we are pushing forward for months (is) that Europe needs a comprehensive plan and that also on the other hand countries with programs have really to do what is in the program, even if it is difficult – and it is difficult,” said the IMF’s Managing Director, Dominique Strauss-Kahn.

The bailout will mean more bitter medicine for the Portuguese. VAT, already at 23%, is likely to rise still further, and more cuts in civil servants’ pay and pensions are expected too.

The deal is likely to be worth some 80 billion euros and could take up to a week to thrash out.

Although the circumstances are different from those in Greece and Ireland, many Portuguese see it as a national humiliation.

The country holds a general election on June 5.