LIGHTS IN Lisbon’s finance ministry will burn late into the night this weekend as European Union, International Monetary Fund and Portuguese officials toil over the details of the country’s €80 billion bailout agreement.

Outside, the streets have been deserted since Thursday, when the caretaker government granted public administration workers an extra half-day holiday so they could leave early for the Easter weekend.

By the time Portugal goes back to work on Tuesday, the plan to rescue its debt-ridden economy on condition of tough austerity measures and structural reforms should be close to conclusion.

As well as tax increases, wage cuts and a pensions freeze, the package is expected to include measures to liberalise the labour, rent and energy markets to tackle Portugal’s problems of weak growth and low productivity.

For many Portuguese it is in fact the contrast between what they perceive as the strong work ethic of the north European officials leading the bailout talks and Portugal’s more relaxed approach that goes to the heart of the country’s economic woes.

The extra holiday this week was a “bad example”, conveying a lax approach to work, said António Saraiva, head of the Portuguese Confederation of Industry. “The [EU and IMF] arrive in Lisbon and we set off for the beach.”

Estela Barbot, a Portuguese economist who advises the IMF, said it portrayed an image of a country that was “not prepared to face up to reality”.

Similar pronouncements on every aspect of Portuguese society have proliferated since the troika of senior officials from the European Commission, the European Central Bank and the IMF arrived in Lisbon a week ago.

Politicians, economists, bankers, lawyers and trade union leaders have lined up to meet the negotiators as if the country had been waiting for years to lie on a therapist’s couch and spill out its troubles.

Amid preparations for a general election on June 5th, the centre-right Social Democrats (PSD), the main opposition party, used the bailout talks to publish an open letter calling for sweeping privatisations and the restructuring of debt-laden state companies.

The centre-left caretaker government of José Sócrates hit back, warning that mixing the election campaign with the rescue package could lead to “a tougher adjustment programme”.

The bailout negotiations have dominated the Portuguese media for weeks, with journalists scrambling to ask questions as limousines ferry the visiting officials from Germany, Denmark and elsewhere back and forth across the city.

“It was one of the most difficult meetings of my life,” Boaventura Sousa Santos, a left-wing sociologist, told reporters after talks with the troika. “I told them I was too old for interrogation and they were very courteous.”

Many moderate voters, however, see the rescue package as a way of forcing politicians to push through long-postponed reforms. According to Pedro Camacho, editor of Visão news magazine, they “view the IMF as a ‘good cop’ who will be tough but fair”.

But Otelo Saraiva de Carvalho, a veteran of the left-wing coup that restored Portugal to democracy in 1974, said he would not have joined the revolution if he had known the democratic era would produce such “an unequal society”.

The country will celebrate the anniversary of the revolt with a traditional bank holiday on Monday. No pause in the bailout negotiations is envisaged. – (Copyright The Financial Times Limited 2011)

REDEMPTIVE POWER EASTER DEAL TO ALLOW €7bn BOND PAYBACK

NEGOTIATORS EXPECT the outline of an agreement on Portugal’s financial rescue package to be concluded late next week or early in May, when the terms will be made public by the caretaker government in Lisbon.

According to officials familiar with the talks, the agreement will be for three years, as was the case with the bailouts of Greece and Ireland, but will focus more on reforms to boost growth and make the economy more competitive.

European Union officials want the package to be approved at a May 16th-17th meeting of EU finance ministers.

This would make funds available to Portugal in time to meet €7 billion in government bond redemptions and interest payments that will fall due on June 15th.

Officials expect the interest rate on the EU loans to be around 5 per cent, the same level as Greece is paying.

The deal will be signed by the government ahead of the election on June 5th.

PETER WISE