EU Rehn: Expect EU Fin Mins To Approve Portugal Rescue Next Week
BRUSSELS -(Dow Jones)- The European Commission endorsed Portugal's bailout program Tuesday, paving the way for the European Union's 27 member states to sign off on the deal.
EU finance ministers are expected to approve the rescue program at a meeting in Brussels next Monday and Tuesday, said EU Commissioner for Economic and Monetary Affairs Olli Rehn.
Finland had been considered a possible hurdle to the bailout, but Rehn downplayed the possibility in a press conference Tuesday in Strasbourg.
"I trust that Finland can support the EU-IMF program for Portugal for the sake of economic sustainability of the EU as a whole," said Rehn.
Based on the economic reform package required for the emergency loans from the EU and International Monetary Fund, Rehn said Portugal's fiscal deficit should decline from 5.9% at the end of 2011 to 4.5% next year, and then 3% in 2013. The interest rate on the EU's loans to Portugal during this period will be between 5.5% and 6%, he said. The IMF last week said the borrowing rate on its loans would be 3.25% in the first years.
Rehn said the goal of the program is for Portugal to return to international capital markets before the end of 2013.
Speaking on Greece's rescue package, he said the EU and IMF would complete its review of the program, which has come under question, in the middle of next week. The review will evaluate Greece's debt sustainability, and added that it would be premature to discuss Greece's 2012 refinancing needs.
However, Rehn said Greece's debt burden is "indeed very significant." He said that adjustment made over the past year to Greece's deficit should not be underestimated, but its next challenge is to implement structural changes in the economy, including privatizations.
Rehn repeated that the commission supports a lower interest rate on Ireland's emergency loans to help the country overcome its debt burden.
