Lisbon bailout to be in place by June vote

PORTUGUESE voters will have a fully negotiated bailout package ready before their June elections, said finance minister Fernando Teixeira dos Santos yesterday, giving them the chance to accept or reject it at the polls.

The loan is likely to be around €80bn (£71.2bn) with conditions based on the austerity package that was rejected by parliament, Teixeira dos Santos said.

IMF and EU officials kicked off negotiations in Lisbon yesterday. Portugal is expected to get a less punitive rate on its rescue than either Ireland or Greece, whose bailout costs are widely thought to be unsustainable.

The aim is to get the rescue in place before Lisbon faces a €4.9bn bond redemption in mid-June. Teixeira dos Santos said: “We are covered until June. But in June we will be needing the activation of this program.”

The speedy schedule is due to Portugal’s rapidly diminishing pile of cash. Analysts estimated that the treasury had €5.6bn left after its early April debt sale, leaving it far short of the €9.6bn it needs between now and June.

Meanwhile, Chinese Premier Wen Jiabao reiterated Beijing’s intention to support Madrid by buying Spanish debt during a state visit yesterday.