Portugal reaches $100 billion bailout deal
STEVE CHIOTAKIS: European leaders today said Portugal could get more than $100 billion in loans from its neighbors. If that rescue plan goes forward, it’ll be the third European bailout in the past year — Greece and Ireland got help too you’ll remember. But Portugal’s rescue package is a little different.
Marketplace’s Stephen Beard is about to leave for Portugal. He joins us live he joins us live from London. Good morning, Stephen.
STEPHEN BEARD: Yes, hello Steve.
CHIOTAKIS: So what’s so different about Portugal’s bailout?
BEARD: Well, we don’t have all the details but it does appear to involve less austerity than the Greek and Irish packages. For one thing, Portugal’s been given an extra year to cut its deficit. Interestingly, this softer approach comes at the urging of the IMF of all people — usually the tough cop in these bailouts.
But Professor Dominic Swords at the Henley Business School says the IMF now thinks too much austerity would depress the Portuguese economy. That it’s vital to keep Portugal growing.
DOMINIC SWORDS: If you’ve got a buoyant economy, you are generating revenue, you’re getting income month by month, you can get tax from that revenue to finance the things you want government to do.
And of course to pay off government debt. The EU and the IMF do seem to have decided that it may have been a mistake to crack down too hard on Greece and Ireland.
CHIOTAKIS: All right Stephen, so is this ‘kinder, gentler’ bailout approach going to solve the crisis then?
BEARD: Well, the public sector unions in Portugal don’t think it’s so kind or gentler. They’re still pressing ahead with an anti-austerity national strike on Friday. And on the wider Euro Zone debt problem, there’s still a lot of trouble brewing Greece with a lot of talk of possible default there. So no real end in sight yet for this seemingly never ending crisis.
CHIOTAKIS: Stephen thank you.
BEARD: OK Steve.
CHIOTAKIS: Marketplace’s Stephen Beard reporting live for us from London.
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