The Eurogroup of finance ministers approved the latest 4.3-billion-euro tranche of EU-IMF bailout loans to Portugal which has agreed fresh austerity measures, ministers said.
“The disbursement will be of a total volume of 4.3 billion euros,” said Eurogroup chair Jean-Claude Juncker, who tipped a return to commercial money markets “next year.”
A statement released by the 17 currency-area ministers said the green light was given for the next European Financial Stability Facility disbursement of 0.8 billion euros, awaiting what it expected was a rubber-stamping by ministers from the 27 European Union states backing a disbursement of 2.0 billion euros by the European Stability Mechanism.
That would combine with 1.5 billion euros expected to be disbursed by the IMF executive board at the end of the month to reach the 4.3-billion total.
With Portugal’s economy in a deep recession and unemployment at record levels, the EU and IMF relaxed the government’s targets last month to lower the public deficit under its 78 billion euro ($101 billion) bailout.
This year’s public deficit target was raised to 5.0 percent of gross domestic product from 4.5 percent, while that for 2013 was increased to 4.5 percent of GDP from 3.0 percent, easing pressure on the government.
But fresh austerity is still required, and the government last week unveiled new tax hikes as part of its 2013 budget. The package is to be put to parliament by October 15 and voted on at the end of November.
In recent weeks, tens of thousands of Portuguese have marched in protest at the painful spending cuts. The unions have also called a new general strike on November 14.