The terms of Portugal’s 78 billion euro bailout look set to plunge the country into recession for the next two years.
The economy is expected to shrink by two per cent this year and in 2012 as a result of higher taxes and deep spending cuts:
Fernando Texeira dos Santos is the Portuguese finance minister:
“The 78 billion euros is the amount that, according to our estimates and evaluations will be enough to cover our financial needs.”
Caretaker Prime Minister Jose Socrates announced late on Tuesday that Lisbon had reached a three-year bailout deal with EU and IMF after weeks of talks.
There is a great deal of anger across Portugal about the nature of the agreement and the financial restraints it imposes on ordinary people.
But the IMF thinks the bailout is sound.
Poul Thomsen is from the IMF in Portugal:
“It’s a programme with a foundation that rests on very strong structural reform, because it’s a programme with large scale international support, and above all because discussion suggests there is broad political support.”
Another two years of recession will make the hard times to come even harder for the country which has had some of the lowest growth rates in Europe for more than a decade.