There are tough times ahead for people in Portugal as they come to terms with the 78 billion euro bailout deal agreed by the government. Spending cuts and tax increases will mean recession at least until 2013.
People on the streets of Lisbon are not impressed with the settlement. “I’d rather not be here to witness all this. I feel sorry for the younger generation,” said one woman.
It has taken nearly a month for the package to be put together by the EU, European Central Bank and the IMF. Since the Portuguese government fell in March, soaring borrowing costs have further hampered the country’s financial situation.
Cross-party agreement means whoever is in charge after voting on June 5 will have to stick to the austerity plan. Jürgen Kröger, Head of European Commission Mission reinforced this, saying:
“In the present election campaign, it should be clear that the next government has to take responsibility for the programme and implement the measures.”
Up to 12 billion euros is earmarked for Portugal’s ailing banking sector, with the possibility of using some of it to pay off bad loans to state-owned enterprises.
European finance ministers will meet to approve the funds on May 16.