Bloomberg News

Madeira to Receive 1.5 Billion Euros in Aid From Portugal

January 29, 2012

(Updates with Madeira governor’s comment in second paragraph, Madeira’s deficit-cutting measures in third.)

Jan. 27 (Bloomberg) -- Portugal will grant about 1.5 billion euros ($2 billion) in emergency aid to Madeira to help the semi-autonomous island region repay debt, Madeira Governor Alberto Joao Jardim said.

“The sustainability of the region’s debt is guaranteed,” Jardim said today at a news conference in Funchal, Madeira, broadcast by SIC Noticias television station. The region will pay the same interest rate Portugal is paying for its international aid plan, Jardim said.

Under the so-called adjustment program, Madeira’s government will increase the value-added tax, cut public workers’ summer and Christmas salary payments, reduce the public workforce and sell state-owned companies to raise money, Jardim said. Those steps mirror actions the national government is taking to meet the terms of its 78 billion-euro bailout from the European Union and International Monetary Fund.

Madeira, about 650 kilometers (400 miles) off Morocco’s coast in the Atlantic, had debt of 6.3 billion euros at the end of the first half, Portuguese Finance Minister Vitor Gaspar said on Sept. 30. Madeira had failed to report debts or expenses with a combined impact of 1.2 billion euros on the 2008, 2009 and 2010 deficits, the National Statistics Institute said the same day.

Correcting Madeira’s accounts led the institute to revise the country’s 2010 budget deficit to 9.8 percent of gross domestic product from 9.1 percent. The country last year followed Greece and Ireland in asking for a bailout from the EU and IMF.

For News and Related Information: On Portugal’s economy: {TNI PORTUG ECO <GO>} Top bond stories: {TOP BON <GO>} European crisis monitor: {CRIS <GO>} Top Europe stories: {TOP EUROPE <GO>}

--With assistance by Henrique Almeida in Lisbon. Editors: Jim Silver, Kevin Costelloe.

To contact the reporter on this story: Anabela Reis in Lisbon at areis1@bloomberg.net.

To contact the editor responsible for this story: Angela Cullen at acullen8@bloomberg.net


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