- The Lisbon-based government will transfer the funds until 2031
- In return, Madeira will put in motion a set of austerity measures
- The archipelago will have 15 years to pay off the loan
Portugal signed an agreement to grant $2 billion in aid to Madeira to enable it to meet its social and financial obligations, the island's officials announced.
The Lisbon-based government will transfer the 1.5 billion euros until 2031, said Alberto Joao Jardim, the president of the Madeira regional government.
In return, the leader said, Madeira will put in motion a set of austerity measures similar to those imposed on Portugal in May when the country agreed to a bailout sponsored by the various world bodies, including the International Monetary Fund.
The archipelago will have 15 years to pay off the loan starting in 2016, Jardim said Friday.
Jardim, who has been in power since 1978, stated that without the loan, the island's "future would be compromised."
He hinted that its "political autonomy" was in jeopardy if an agreement with Lisbon had not been reached.
In recent weeks, the government had been unable to pay medical bills covered by the local health system and was in danger of default.
The local government hopes to collect about $140 million in extra revenue this year, which means the bulk of the effort to pay back the aid will come from taxpayers.
The archipelago of Madeira is in the Atlantic Ocean and includes the islands of Madeira, Porto Santo and Desertas.
It has a population of more than 267,000, and according to the European statistics agency.