Portuguese bailout interest-rate between 5.5-6.0%: EU

10th May 2011, Comments 0 comments

Portugal can expect to be charged between 5.5 and 6.0 percent interest for its 78-billion-euro international financial bailout, EU economic affairs commissioner Olli Rehn said on Tuesday.

After the European Union and the International Monetary Fund agreed a 78-billion ($112-billion) bailout plan last week in Lisbon, Rehn said Portugal would be charged rates "somewhere in the scale of over 5.5 percent but clearly less than six percent," for the loan.

The details will be decided with whatever new government arises from June 5 elections in Portugal.

The rate charged for such bailouts has proved a thorny subject on the three occasions they have been offered.

Roughly 6.2 percent was charged on Greece's 110-billion-euro bailout a year ago, but that rate was trimmed back by EU leaders in the spring by roughly one percentage point.

Athens is now back looking for more financial aid, after its debt load ballooned to some 340 billion euros amid austerity measures imposed by the EU and IMF, made worse by a deep national recession.

Earlier, Rehn also said to "expect" a cut in the rate charged to Ireland for its 67.5-billion-euro bailout, ending a row that has pitted post-bailout Irish premier Enda Kenny against partners led by French President Nicolas Sarkozy, who did not want to budge without first obtaining concessions on Dublin's ultra-competitive low corporation tax rate.

The Portuguese bailout is expected to be approved by eurozone and then EU finance ministers meeting in Brussels next Monday and Tuesday -- with expectations in Finland that parties negotiating a new coalition there after the spectacular rise of a eurosceptic, anti-bailout party in elections last month will back the deal.

© 2011 AFP

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