Portugal raised €1.117 billion with the issue of short-term bonds today, but the interest rate it had to pay rose, the day after a debt rescue deal with the EU and IMF.
The money raised was in the form of three-month treasury notes but the rate was 4.652% compared to 4.046% when the last such issue was made on April 20, data from the Portuguese debt agency IGCP showed.
The outgoing Socialist government and experts from the European Union, European Central Bank and International Monetary Fund last night reached agreement on a three-year debt rescue for Portugal put at €78 billion.
The experts from the three institutions are meeting opposition right-wing parties today to obtain their support for the corrective measures set as conditions for the bail-out. The need support from the right-wing parties in the event they win the early election on June 5.
Portugal faces a deadline of June 15 if it is to avoid default when debt of about €5 billion falls due for repayment.
'Good agreement' on bail-out deal - Socrates
Portugal's outgoing Prime Minister Jose Socrates said last night that the country had reached a 'good agreement' on the three-year bail-out package worth €78 billion from the EU and IMF.
'I would like to announce to the Portuguese people that the government has reached agreement today with the representatives of international institutions on the programme of financial aid to our country,' Socrates said last night.
'The government has reached a good agreement that defends Portugal,' he said in a televised address. His office later said that Portugal is seeking €78 billion in foreign assistance under the programme.
Officials from the 'troika' of the European Central Bank, European Union and International Monetary Fund have been in Lisbon for two weeks negotiating the terms of the financial rescue package.
Socrates said the plan called for a loosening of the deficit reduction targets for Portugal, whose economy is expected to shrink this year as it implements austerity measures.
'It is a three-year programme which sets more gradual deficit reduction targets: 5.9% this year, 4.5% in 2012 and 3% in 2013,' the prime minister said. But he did not give details about how this would be implemented, saying he needed 'consultations' with opposition parties.
Lisbon was forced to ask for a bail-out last month after Socrates' government resigned following a parliamentary dispute and the rejection of a fourth round of austerity measures sent its borrowing costs prohibitively higher.
Investors had been steadily asking for higher rates of return to lend money to Portugal, which has to roll over billions in maturing debt this year and has a high budget deficit.
The IMF stressed last night that the pact would have to be approved by the main opposition parties.
'We have said from the beginning that it is important that any programme should have broad cross-party support and we will continue our engagement with the opposition parties to establish that this is the case,' a spokesman said.
Socrates underscored that the 'international institutions have recognised that the Portuguese situation is a far cry from those in other countries.'
Portugal is the third euro zone member to seek international assistance following Greece's €110 billion rescue one year ago and Ireland's €85 billion bail-out last November.
Lisbon had previously aimed to reduce its public deficit to 4.6% of gross domestic product this year, 3% in 2012 and 2% in 2013. These targets were put in doubt when the national statistics office announced last month that the 2010 public deficit came in at 9.1% of gross domestic product, above the government's target of 7.3%.
European Union rules require the bloc's 27 member states to keep their deficits below 3%, although nations may be permitted some leeway during an economic crisis. Portugal's public debt totals nearly €160.4 billion or 93% of GDP.
The government's austerity measures have hit hard, with the country's economy set to contract by 1.4% this year according to its central bank, complicating efforts to eliminate the deficit.
The quick agreement of the terms of the rescue package means that euro zone finance ministers will be able to review the plan at their regular monthly meeting on May 16.
