Germany expects deal on Portugal

Germany’s finance minister predicts the EU will agree next week to bail out Portugal.

Wolfgang Schäuble, Germany’s finance minister, today said that he expects eurozone ministers to agree a €78 billion bail-out package for Portugal next week.

He said the programme, which offers financial assistance from the eurozone rescue fund and the International Monetary Fund in return for efforts to cuts Portugal’s deficit, was “ambitious” but “feasible”.

There have been doubts about whether Finland would be able to approve the bail-out because it has yet to form a government following elections on 17 April. A populist party opposed to aiding Portugal, the True Finns, emerged as the third-largest force in the Finnish parliament and is expected to join the new government. The parliament is, nonetheless, expected to approve the eurozone’s rescue package with the backing of the Social Democrats, the second-largest party.

Schäuble said it was important that all political parties in Portugal supported the plan to reduce the country’s deficit and implement it after elections scheduled for 5 June. “It is for Portugal to do its homework,” he said, adding that the country had to take action to improve its competitiveness.

Support for Greece

Schäuble also commented on media speculation that Greece may not be able to raise new debt on financial markets and may therefore need additional support from other members of the EU.

The German finance minister said it was too early to determine whether Greece needed assistance on top of the €110bn bail-out package agreed last May.

He said that no decision would be taken on Greece until there had been a new report on the country’s compliance with its deficit reduction programme. This report is due in June, Schäuble said.

The report is being drawn up by the European Commission, the International Monetary Fund and the European Central Bank.

Speculation about Greece was fuelled on Friday by reports of a secret meeting attended by finance ministers from six eurozone countries, including Schäuble himself, to discuss the situation in Greece.