Bloomberg News

Merkel Says There Are No Reasons to Renegotiate Portugal Bailout

November 11, 2012

German Chancellor Angela Merkel said there are no reasons to renegotiate the terms of Portugal’s financial aid program as the country’s government tries to comply with the bailout plan requested in April 2011.

“At the moment there is no reason to renegotiate them,” Merkel said in an interview with Portuguese television station RTP1. “Portugal has fulfilled the obligations, it has implemented the measures -- implemented them in a very courageous way.”

Merkel, who is visiting Lisbon tomorrow, said she doesn’t expect Portugal to get a second rescue package. “At the moment, the measures have been well implemented and we’re hoping that the program will be a success,” she said.

Portugal is battling rising joblessness and a deepening recession as the government raises taxes to meet the terms of a 78 billion-euro ($99 billion) aid plan from the European Union and the International Monetary Fund. Portugal has already been given more time to narrow its budget shortfall after tax revenue missed forecasts and the economy is set to contract for a third year in 2013.

Portugal aims to reduce its budget deficit to 5 percent of gross domestic product this year instead of the previous goal of 4.5 percent, Finance Minister Vitor Gaspar said on Sept. 11 after EU and IMF officials agreed on the new targets. It’s now aiming for a deficit of 4.5 percent in 2013 rather than a prior goal of 3 percent and will only meet the EU’s 3 percent limit in 2014, when it targets a 2.5 percent gap.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: Joao Lima at jlima1@bloomberg.net


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