Portugal looks for bail-out help

Government hopes extension of loan maturities and new spending cuts will help resolve growing crisis.

Portugal hopes that a potential eurozone agreement to extend maturities on bail-out loans and a further round of cuts will stave off the threat of having to request a second emergency rescue.

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Finance ministers of the eurozone’s 17 member states meet for scheduled talks in Dublin on Friday (12 April), and the maturities of bail-out loans to Portugal and Ireland is high on the agenda.

The issue has become more pressing because the Portuguese government has had to find new savings after the country’s constitutional court blocked a proposal to suspend benefits for civil servants and pensioners worth €1.3bn.

Pedro Passos Coelho, Portugal’s prime minister, said that he would find the money by making further cuts to education, health and social security budgets. He will then have to convince the ‘troika’ of Portugal’s international lenders – the European Commission, European Central Bank and the International Monetary Fund – that they are sufficient to comply with reform conditions imposed by 2011’s €78 billion bail-out.

Passos Coelho also said that he hoped that eurozone finance ministers would help ease the burden by agreeing to extend maturities on Portugal’s bail-out loans when they meet on Friday.

“The government is committed to all the goals of the aid program,” Passos Coelho said. “We will have to do everything to avoid a second rescue.”

In a statement issued last night the Commission said that Portugal needed to demonstrate a “continued and determined implementation” of the bail-out conditions in order to obtain an extension of bail-out maturities.

“The Commission supports that such a decision be taken soon,” the statement added.