The bailout package provided to Portugal of €78 billion emphasises a reduction of labor costs and an increase in productivity, focusing strongly on job creation.

This, officials from the International Monetary Fund (IMF) and the European Union observed, makes it strategically different to the rescue packages agreed with Ireland and Greece, the Financial Times reports.

Head of the IMF negotiating team Poul Thomsen told the news source that Portugal "needs to become much more open to competition", adding that this financial aid is based on a "three-pronged strategy of structural reforms, fiscal consolidation and prudent financial sector policies".

As part of the agreement, the country must reduce its budget deficit to three per cent of gross domestic product by 2013.

On May 5th, managing director of the IMF Dominique Strauss-Kahn announced that €52 billion of the financial package would be provided by the European Union, with the IMF's contribution amounting to around €26 billion.

Posted by Alex Donnell