WASHINGTON (AFP) ― The International Monetary Fund on Friday approved a 26-billion-euro ($36.8 billion) three-year loan to Portugal as part of a European Union bailout of the struggling eurozone country.
The “front-loaded” program makes about 6.1 billion euros “immediately available to Portugal” from the IMF, the Washington-based institution said in a statement.
“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,” it said.
The loan is part of a three-year, 78-billion-euro EU-IMF bailout for Portugal unanimously agreed by EU finance ministers on Monday.
The money comes with the condition that Lisbon embarks on a major raft of public sell-offs.
Portgual becomes the third eurozone country in a year to receive a multi-billion-euro EU-IMF bailout, after Greece and Ireland.
The loan the IMF executive board approved Friday is an Extended Fund Facility, aimed at supporting the Portuguese authorities’ economic adjustment and growth program, the IMF said.
“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 in the statement.
“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.”
The IMF said the loan won fast-track emergency approval and entails “exceptional access” to IMF resources.
For all of 2011, total IMF financing for Portugal will amount to 12.6 billion euros and will be partnered with the EU’s commitment of 25.2 billion euros.