European finance ministers approved Portugal bailout deal amid Strauss-Kahn scandal
Brussels, Belgium (AHN) – European finance ministers approved Portugal’s $110 billion (EUR 78 billion) bailout amid the scandal that International Monetary Fund Managing Director Dominique Strauss-Kahn is facing.
The ministers said Strauss-Kahn’s absence in the bailout talks apparently did not disrupt the continuity in the IMF’s operations and decision-making process. The ministers said they approved the bailout package because providing a loan to Portugal would safeguard financial stability in the euro area and throughout the 27-member regional bloc.
Amid the high-level talks, Strauss-Kahn was denied bail, declared a flight risk and remanded in custody in New York on attempted rape charges.
The loan to Portugal will be divided three ways among the European Financial Stabilization Mechanism, the European Financial Stability Facility and the IMF, with each body contributing $36.7 billion (EUR 26 billion).
In exchange for the bailout that Portugal requested, Lisbon agreed to reform the country’s health care system and implement a wide-scale privatization program.
As part of the bailout deal, private bondholders were ordered to keep their exposure to Portuguese debt, instead of selling the bonds. Portugal will encourage private investors to maintain their overall exposures on a voluntary basis.
The deal is the third eurozone bailout in seven months. Last May, Greece was granted a $155 billion (EUR 110 billion) package and Ireland a $120 billion (EUR 85 billion) loan in November.
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