Brussels, 13/05/2011 (Agence Europe) - On Friday 13 May, EU Economic and Monetary Affairs Commissioner Olli Rehn said Finland had made “constructive proposals” about further guarantees of repayment from Portugal in return for Finland endorsing the Portuguese rescue plan, adding that the Commission was now examining the proposals ahead of discussions at Monday's Eurogroup meeting. Finland's approval of the aid package should mean that the Portuguese austerity programme can be unanimously endorsed by the Eurogroup. The country will receive loans of some €78 billion from the EU and the IMF in return for implementation of a severe austerity package (see EUROPE 10375).
In order to secure a deal at the Finnish parliament in support of the Portuguese bailout, the prime minister-in-waiting, Jyrki Katainen, managed to negotiate support from the Finnish social democratic party, which had been demanding concessions (see EUROPE 10377). The party's demands include stronger guarantees that the EU loans to Portugal will be repaid ahead of other loans. Lisbon will also be required to negotiate with its creditors in the private sector to ensure they do not remove capital from the country until the bailout loans have been paid off.
Rehn said the interest rate on the Portuguese package (slightly under 5.7%) had been calculated in a similar way to the interest rate for the Irish aid package (6.8%) and the Greek aid package (4.2%) and was in line with the IMF's policy of the market rate plus 2% to cover the default risk for loans of up to three years, and 3% for loans for more than three years. Rehn said the difference between the IMF interest rate calculations and the EU's was due to the fact that the IMF's rates are variable but the EU's are fixed. (M.B./transl.fl)