Europe's rich countries pushed Portugal to make deeper-than-planned budget cuts in the heat of an election campaign in exchange for an emergency aid package estimated at €80 billion.In an unprecedented intervention in national politics, euro-area finance ministers said Portugal can win relief by mid-May as long as it makes cuts that go beyond measures that failed to pass parliament in March and led to the government's downfall.
Last month's austerity plan "is a starting point," European Union Economic and Monetary Commissioner Olli Rehn told reporters after a meeting of European finance officials today in Godollo, Hungary. "It is indeed essential in Portugal to reach a cross-party agreement ensuring that such a programme can be adopted in May."Portugal's bid for emergency aid opens what European leaders say will be the final chapter in the debt crisis that erupted in Greece last year, spread to Ireland and triggered speculation that the 17-nation euro area might not survive in its current form.
EU, European Central Bank and International Monetary Fund officials will head to Lisbon next week to start negotiations over the package, with the goal of wrapping it up on May 16, three weeks before Portugal's June 5 election."The package must be really strict because otherwise it doesn't make any sense," said Jyrki Katainen of Finland, one of the euro region's six AAA states. "The package must be harder and more comprehensive than the one the parliament voted against." (Bloomberg)