Thursday

8th Dec 2016

Portugal expected to exit bailout without further loans

  • Portuguese people have taken to the streets against the bailout-related austerity measures (Photo: Pedro Ribeiro Simoes)

Portugal in the coming days is expected to announce its exit from the EU-IMF bailout without further loans to cushion the transition, with the government reaffirming Wednesday (30 April) its commitment to reduce the budget deficit.

After three years of austerity measures linked to the €78 billion rescue, the government said it expects to have room to start reversing public sector salary cuts from 2015, while still sticking to the deficit reduction targets.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

But the salary increase would be subject to the country's economy getting back on track, finance minister Maria Luis Albuquerque said.

"Portugal still spends more than it generates. We have to follow the path, all the Portuguese know all too well the costs of budget indiscipline," she said.

The plan was announced after meetings with the troika of international lenders (European Commission, International Monetary Fund, European Central Bank), who are finalising Portugal's last review under the bailout programme, which ends on 17 May.

Lisbon still has to slash the budget deficit to 4 percent of GDP this year and to 2.5 percent next year, despite its meagre economic recovery and high unemployment rate (15%).

But support for a continuation of the bailout, even in the weaker form of a standby loan, is thin both in the country itself and in donor countries – notably Germany.

Economists are also indicating that Portugal can make it out of the bailout without further help, like Ireland did at the end of last year.

"Portugal is expected to have a clean exit. We have been recommending Portugal for 2014 and so far Portugal has been the star performer," said the Copenhagen-based Danske Bank in a research note.

Last week, Portugal held its first auction for 10-year bonds since it requested a bailout three years ago, raising €750 million at an interest rate considered low (3.6%) compared to the more than 15 percent it had to pay at the peak of the crisis.

Eurozone finance ministers on 5 May are expected to approve Portugal's exit from the bailout with no further assistance.

No euro crisis after Italian vote, says EU

The Italian PM's resignation after a failed constitutional referendum has not changed the situation, the Eurogroup president has said. Financial markets have remained stable.

Stakeholders' Highlights

  1. UNICEFSchool “as Vital as Food and Medicine” for Children Caught up in Conflict
  2. European Jewish CongressEJC President Breathes Sigh of Relief Over Result of Austrian Presidential Election
  3. CESICongress Re-elects Klaus Heeger & Romain Wolff as Secretary General & President
  4. European Gaming & Betting AssociationAustrian Association for Betting and Gambling Joins EGBA
  5. ACCAWomen of Europe Awards: Celebrating the Women who are Building Europe
  6. European Heart NetworkWhat About our Kids? Protect Children From Unhealthy Food and Drink Marketing
  7. ECR GroupRestoring Trust and Confidence in the European Parliament
  8. UNICEFChild Rights Agencies Call on EU to put Refugee and Migrant Children First
  9. MIRAIA New Vision on Clean Tech: Balancing Energy Efficiency, Climate Change and Costs
  10. World VisionChildren Cannot Wait! 7 Priority Actions to Protect all Refugee and Migrant Children
  11. ANCI LazioRegio-Mob Project Delivers Analysis of Transport and Mobility in Rome
  12. SDG Watch EuropeCivil Society Disappointed by the Commission's Plans for Sustainable Development Goals