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Portugal passes latest bailout review by troika

Portugal has passed the latest review of its continuing spending cuts and economic reforms, paving the way for the country to receive the next $19 billion round of rescue funds from the EU, IMF and European Central Bank, Finance Minister Vitor Gaspar said Tuesday.

Portugal bailout finance minister 2012 02 28Enlarge
Portugal is on track to meet the terms of its €78 billion ($104.5 billion) bailout program, the country’s Finance Minister Vitor Gaspar said Tuesday after receiving an assessment by international lenders. (PATRICIA DE MELO /AFP/Getty Images)

Portugal has passed the latest review of its continuing fiscal consolidation and economic reforms, putting it on track to meet the terms of its €78 billion ($104.5 billion) bailout program, the country’s Finance Minister Vitor Gaspar said Tuesday after receiving an assessment by international lenders.

It paves the way for Portugal to receive the next €14 billion ($19 billion) round of rescue funds from the so-called troika of the European Union, the European Central Bank and the International Monetary Fund.

Including that tranche, the country will have received about 60 percent of the bailout money since the program began mid-way through last year, according to The Wall Street Journal.

“The result [of the evaluation] was positive despite unfavorable conditions,” Gaspar said. “The mission confirmed the fulfilment of the criteria demanded by the terms.”

Portugal also plans to return to the debt market as envisaged in its rescue plan to fund a €9.3 billion bond repayment due in September 2013, he added, according to The Financial Times.

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The government has been working hard to cut spending and implement key economic reforms in the face of a steep recession and a record high jobless rate of 14 percent, according to the BBC, winning praise from the troika and receiving its bailout funds with much less commotion than Greece.

Last month it concluded a deal with employers and unions to cut holidays and compensation paid to staff when they are laid-off. The agreement also made easier to hire and fire workers.

However, the government’s deep cuts have hit public sector employees particularly hard, prompting mass protests, as well as a general strike planned for late March.

Gaspar also warned that Portugal’s economic situation would worsen in 2012, Reuters reported. The government now expects the Portuguese economy to shrink by 3.3 percent this year, from a previously forecast 3 percent decline, while Lisbon predicts that unemployment will rise to 14.5 percent instead of falling to 13.7 percent.

Many economists say Portugal may have to ask for extra emergency funding, or even restructure its debts in the same way that Greece did. 

More from GlobalPost: Is Portugal Europe’s next basket case?

http://www.globalpost.com/dispatch/news/regions/europe/120228/portugal-passes-latest-bailout-review-troika