IMF approves $36.8 billion loan to Portugal

The International Monetary Fund (IMF) on Saturday approved a 26 billion euro ($36.8 billion) loan to Portugal to help the country overcome its debilitating debt crisis.

The Washington-based institution said in would immediately pay out 6.1 billion euros to ease investor concerns.

“The financing package is designed to allow Portugal some breathing space from borrowing in the markets while it demonstrates implementation of the policy steps needed to get the economy back on track,” the IMF said in an e-mailed statement.

The loan is part of a joint 78 billion euro ($110 billion) rescue package with the European Union.

“The Portuguese authorities have put forward a program that is economically well-balanced and has growth and job creation at its center,” IMF acting Managing Director John Lipsky said.

“It addresses the fundamental problem in Portugal – low growth – with a policy mix based on restoring competitiveness through structural reforms, ensuring a balanced fiscal consolidation path, and stabilizing the financial sector.”

Under the deal, Portugal will cut spending, raise taxes, as well as reform its labor and justice systems and implement a privatization program.

Portugal is the third EU country to receive a multi-billion EU/IMF bailout in the past year following Greece last May and Ireland in November.

MOSCOW, May 21 (RIA Novosti)

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