MercoPress. South Atlantic News Agency

EU tells Portugal more reforms are needed to secure the 80 billion Euro bail-out

Portuguese Finance Minister Fernando Teixeira dos Santos

Euro zone finance ministers told Portugal that it would have to implement new economic reforms that went beyond those proposed by its outgoing government if it hoped to secure aid from the EU and IMF.

Portugal bowed to intense pressure from financial markets and its European partners this week and became the third euro zone country after Greece and Ireland to request financial help from the European Union and the International Monetary Fund.

Finance ministers from the 17-nation single currency area met in Budapest Friday to discuss the sovereign debt crisis that has haunted the bloc for over a year, with Portugal the main focus of their talks.

“The package must be really strict because otherwise it does not make any sense to guarantee anybody's loan,” Finland's Finance Minister Hyrki Katainen told reporters.

“The package must be harder and more comprehensive than the one which parliament voted against.”

French Economy Minister Christine Lagarde said she expected Portugal to propose specific steps that would restore confidence in an economy that is among the least competitive in the currency zone.

Portuguese Prime Minister Jose Socrates resigned late last month after parliament rejected a new round of budget austerity meant to help the country meet its deficit reduction targets for 2011.

He is continuing to serve in a caretaker capacity until new elections are held on June 5. The main opposition party has backed the request for aid, but negotiations on an economic adjustment program -- a precondition for assistance -- are likely to be tough as cross-party consensus will be needed.

“We need a commitment of the country not only a commitment of the government,” Portuguese Finance Minister Fernando Teixeira dos Santos said. “I think we have to be committed to reaching an agreement as soon as possible,” he added.

Lisbon is expected to require 80-85 billion Euros in aid roughly the same amount as Ireland but less than the 110 billion Euros package offered to Greece nearly one year ago.