LyrArc Article Gist
Informed sources say Portugal will require 90 billion euros ($129 billion) in a bailout package from the European Union and the International Monetary Fund. Of this 10 billion euros will be needed in June 2011. Germany's finance minister Schauble, said the austerity program that is part of the bailout will be put together in the next 2-3 weeks with the help of the European Commission, the European Central Bank, and the IMF. The bailout will probably be structured in several phases coming before and after June 5 elections in Portugal. The current Socrates administration and a new administration will share responsibility in negotiations for the deal. The opposition Social Democrats who are front runners supported by 39% of the voters and the CDS party with 7%, both support the current government's bailout request. A Social Democrats-CDS coalition is likely after the June elections. The leader of the Social Democrats, Pedro Coelho, is involved in the negotiations. The crisis came to this point after Portuguese banks-which were among the principal buyers of government debt- decided to stop buying additional governmet debt. This meant the government with low cash reserves had little chance of meeting the 4.9 billion euros in debt repayments in June, after a 4.2 billion euro debt repayment in April. The Portuguese government had preferred a bridge loan from the EU but the EU declined this request, insisting on austerity measures. A recent effort by the Socrates government to get an austerity package was defeated in Parliament, leading to Socrates' resignation.