After a government collapse in March, soaring borrowing costs forced Portugal to become the third eurozone member to seek financial aid after Greece and Ireland.
EU, European Central Bank and IMF officials have spent nearly a month in Lisbon designing the three-year rescue package, which imposes austerity and tough reforms and is expected to be approved by European finance ministers on 16 May.
"I will be honest, this is not an easy programme, it is a tough programme, necessary, but we consider it fair," Jürgen Kröger, head of the EU mission negotiating the plan, told a news conference.
The International Monetary Fund said it had agreed to lend Portugal €26 billion, one third of the total, with the EU accounting for the remaining €52 billion.
But Portugal's bond yields rose again after falling in initial relief on Wednesday. Ten-year yields rose to 10.20% from 10.06% on Wednesday.
The package includes steep spending cuts, tax increases and reforms of labour and justice systems as well as privatisations. It also earmarks €12 billion to banks but bank stocks surged after the head of the country's banking association said they were unlikely to need the fund.
"A programme of this scale, with ambitious targets and an intense pace of implementation, is demanding," said Portuguese Finance Minister Fernando Teixeira dos Santos.
IMF mission head Poul Thomsen said Portugal's economy will face "significant headwinds in the next three years" and is expected to contract by 2% in 2011 and 2012 before returning to growth in the first half of 2013.
Portugal's Prime Minister José Socrates resigned in March, sparking a sharp rise in borrowing rates and credit rating downgrades that led to an aid request on 7 April.
A snap general election is now scheduled for 5 June and it will be up to the new government to implement the bailout plan. That political limbo prompted the EU and IMF to seek the support of the main opposition parties for the deal, which they obtained on Wednesday.
The main opposition, the Social Democrats, hold a narrow lead in most opinion polls ahead of the vote.
"The success of the programme lies also in its swift implementation, so in the present election campaign it should be clear that the next government has to take the responsibility for the programme and implement the measures," Kröger said. "That will restore confidence in the Portuguese economy."
Speaking in Helsinki, European Central Bank President Jean-Claude Trichet said about Portugal: "We are confident. Of course it calls for the present government [...] and future governments to do the job".
EU interest rate to be decided in mid-May
A key unknown of the loan programme is what interest rate Portugal will pay, especially compared with Greece and Ireland.
Kröger said the final rate will be decided by European finance ministers when they meet in mid-May but suggested it could be similar to the rate Greece pays.
The deal could still face problems after Eurosceptic parties surged in elections in Finland last month.
Portugal needs the funds from the bailout to be able to meet a bond repayment of €4.9 billion on 15 June.
Portugal won a delay of deadlines to meet fiscal goals under the loan, something which has prompted some economists to conclude the EU and IMF have learnt from the mistakes of overly tough conditions in the loan to Greece.
But the officials said the two countries' bailouts cannot be compared.
"I don't think we can make that comparison to the other countries, every country is unique, this programme is tailor-made for Portugal," the IMF's Thomsen said.
Under the bailout, Portugal will now only have to meet a budget deficit target of 5.9% of gross domestic product this year, compared with a previous goal of 4.6%.
That still represents a sharp cut given the deficit totalled 9.1% of GDP last year and, under the deal, it must be lowered to 4.5% of GDP in 2012 and 3% in 2013.
A return to recession will make it even more of a challenge for the heavily indebted country, which has had some of the lowest growth rates in Europe for a decade, to return to financial health.
(EurActiv with Reuters.)
