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EU ready to offer Portugal more help

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(Globalpost/GlobalPost)

The European Union is ready to offer Portugal further aid once its current bailout expires in May, Economics Affairs Commissioner Olli Rehn said on Monday.

"Europe will keep its word" and continue to help Portugal, but only on condition it "continues reforms already under way," Rehn wrote in an editorial for business daily Diario Economico.

"The absolute priority is to successfully conclude the current programme," Rehn wrote, while warning that it was "indispensable that Portugal maintain budgetary discipline and structural reforms in the upcoming years".

Portugal has been living under the strict rules of a 78-billion-euro rescue programme agreed in May 2011 with the so-called troika of the EU, the International Monetary Fund and the European Central Bank.

In exchange for rescue loans, Portugal agreed to push through austerity measures and deep reforms that have sparked recession, pushed up unemployment and met with increasing resistance from unions and voters.

While spearheading the bailout programme, the government of Pedro Passos Coelho has so far faced the growing opposition, which is often made worse by high court decisions that slap down austerity measures as illegal.

Earlier this month, the constitutional court struck down another austerity proposal, this time a plan to cut public servant pensions above 600 euros by 10 percent, a centrepiece measure of the 2014 budget.

On Monday, the junior minister tasked with defending the pension cut, Helder Rosalino, was shuffled out of government replaced by finance official Jose Maria Martins.

Officially, Rosalino left government for personal reasons, but Portuguese media reported that the minister manoeuvred for the exit, frustrated by the difficulty in pushing through troika-mandated reforms.

Rosalino had first sought to leave office in July, but was persuaded to stay after the surprise resignation of then-finance minister Vitor Gaspar, which nearly brought an early end to the Coelho government.

Coelho has said Portugal faced two scenarios as it exits the rescue programme: accessing a short-term EU credit line, or making a clean break like Ireland did this month, by returning to the markets without additional help.

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http://www.globalpost.com/dispatch/news/afp/131230/eu-ready-offer-portugal-more-help