Portugal secures €78-bn bail out package from IMF

Portugal has been able to secure an international bailout worth €78 billion over a three-year period.

According to Portugal's prime minister, Jose Socrates, a favourable agreement had been won after more than two weeks of negotiations with the IMF, the European Central Bank and the European Commission.

The aid would ensure that Portugal can pay its domestic and foreign creditors, but he did not disclose more details of the agreement, but said that certain salaries and pensions would not be affected.

Residents in Lisbon are, however, not convinced. They say the prime minister only said the best things as it suited him, while he probably left the IMF to speak the worst things.

However, a day following the agreement, Portugal was forced to offer higher interest rates on its debt, which added to fears that like in Greece and Ireland after their aid deals, financing costs in the country would continue to escalate.

According to analysts while all three countries stood to benefit in the short term from the EU and the IMF, their ability to continue to raise affordable short-term funds from
international investors would be crucial.