–Adds Details On the Plan And Quotes From Socrates

LISBON (MNI) – Portugal has reached agreement on a E78 billion
bailout package with the European Union and International Monetary Fund,
the country’s caretaker Prime Minister Jose Socrates announced Tuesday
night.

He said the package was tied to a three-year plan to bring the
country’s deficit down progressively to 5.9% of GDP this year, from 9.1%
in 2010, then to 4.5% in 2012 and, finally, to the EU’s threshold of 3%
in 2013.

Socrates said the program was substantially similar to a government
austerity plan whose defeat in parliament led to the resignation of
Socrates and new elections to be held June 5.

“The measures are essentially those that were in the most recent
growth and stability pact, though in some cases they were more
far-reaching,” Socrates said. He added that “some measure are new,”
though there will be an analysis and a final consultation period for the
political parties before they are adopted.

The plan will not require additional budget cutting measures this
year. It will not cut the country’s 13th and 14th months of salary, “or
replace them with savings instruments,” Socrates said. Nor will it
privatize social security, he added, denying reports that had circulated
in Portuguese media.

Socrates sought to reassure the Portuguese people, saying the
package would not require cuts in public administration or in the
minimum wage, and would not touch pensions above E600 per month, as had
been rumored in the press. Only pensions above E1,500 will be cut,
Socrates said, adding that that had been part of his government’s recent
austerity package.

Socrates made the announcement in a brief televised address to the
nation, during which he did not mention the amount of the aid package.
His office later confirmed television reports that it would total E78
billion. In similar aid deals for debt-stricken Greece and Ireland, the
EU has generally provided about two-thirds of the loan money and the IMF
one-third.

Socrates said the aid deal was a “good agreement,” adding that, “we
will beat this crisis.”

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