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Portugal's opposition checks out bailout

Portugal's opposition checks out bailout
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Leaders of Portugal’s main opposition party, the Social Democrats, have been meeting with European and IMF officials looking at the details of the just announced 78-billion-euro bailout to see if they will back it.

According to opinion polls the Social Democrats will likely form the new government next month.

Portugal’s left-wing parties remain firmly opposed to the bailout. Francisco Louçã, leader of the ‘Bloco de Esquerda’ party said: “Portugal faces a recession this year, that will continue next year and the number of unemployed will rise from 700,000 to 800,000. If this is the plan, then we already know the outcome and we can anticipate that result based on the calculations of this plan’s promoters (the IMF/EU): the result is a tragedy which will destroy the economy.”

Portugal’s budget shortfall is 10.5 billion euros. What Lisbon will owe by the end of the year is predicted to amount to 97.3 percent of its annual gross domestic product. The country’s economy is forecast to shrink by 0.9 percent this year compared to last year.

Against that background, analysts said the incoming government will have little choice but to accept the terms of the bailout deal.

The announcement of it did provide some relief in the bond market – the amount of interest that Portugal had to offer to investors to get them to buy those bonds fell for the first time in many weeks.

But that yield is still around 10 percent, down from 10.32 percent on Tuesday.