Portugal aid terms to be stricter: EU

Written by Bloomberg | Updated: Apr 9 2011, 08:17am hrs
Europes rich countries pushed Portugal to make deeper-than-planned budget cuts in exchange for a rescue package that might amount to as much as 90 billion euros ($130 billion).

Finance minister Jyrki Katainen of Finland, one of the euro regions six AAA states, said Portugals deficit-reduction steps must go beyond the measures that failed to pass parliament last month and prompted new elections.

The package must be really strict because otherwise it doesnt make any sense, Katainen told reporters before a euro finance ministers meeting on Friday in Godollo, Hungary. The package must be harder and more comprehensive than the one the parliament voted against.

Portugals bid for emergency aid opens what European officials 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.

A figure of 80 billion euros to 90 billion euros would be reasonable for Portugal, Belgian finance minister Didier Reynders said. Fridays meeting will agree to start negotiations on an aid package, European Union economic and monetary commissioner Olli Rehn said.

It is in our interest to have a quick negotiation, Portuguese finance minister Fernando Teixeira dos Santos said. That will be demanding, given the political situation in Portugal.