A programme which has been negotiated with the Portuguese authorities by the Commission, in liaison with the ECB and the IMF, will provide EU financial support. Ministers concur with the Commission and the ECB that providing a loan to Portugal is warranted to safeguard financial stability in the euro area and the EU as a whole.

The programme was announced by the Portuguese authorities on 5 May and Ministers welcomed the support expressed by opposition parties to ensure a rigorous and swift implementation of the programme. The Ministers of the Eurogroup and ECOFIN believe that the economic and
financial adjustment programme will address in a decisive manner the fiscal, financial, and structural challenges of the Portuguese economy. It will also help to restore confidence and safeguard financial stability in the euro area. This programme will be based on three pillars:

• A fiscal adjustment to restore fiscal sustainability but also ambitious, which includes through the correction of the excessive deficit by 2013 respecting the original deadline set by the Council. Fiscal sustainability will be supported by a strengthening of the budgetary processes, including enhanced monitoring and reporting, more efficient revenue administration and better control over Public-Private-Partnerships and State-Owned Enterprises, reforms of the health system and of public administration and a privatisation programme.
• Growth and competitiveness enhancing reforms of the labour market, the judicial system, network industries and housing and services sectors, to foster sustainable and balanced growth and the unwinding internal and external macroeconomic imbalances.
• Measures to ensure a balanced and orderly deleveraging of the financial sector and to strengthen the capital of banks, including adequate support facilities. At the same time, the Portuguese authorities will encourage private investors to maintain their overall exposures on a voluntary basis.

The financial package of the programme will cover financing needs up to €78 billion, which should be shared equally amongst the European Financial Stabilisation Mechanism (EFSM), the European Financial Stability Facility (EFSF) and the International Monetary Fund (IMF).