Sunday

26th Feb 2017

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.

Opinion

Portugal and Greece: the odd return to markets

In the past few weeks, Portugal and Greece have returned to the markets in moves seen in Brussels as heralding a rebound in Southern Europe. But a fragile recovery has barely begun and will take years.

News in Brief

  1. Spanish court jails former IMF chief Rato
  2. Macron proposes Nordic-style economic model for France
  3. Germany posts record high budget surplus
  4. Labour ousts Ukip in Brexit homeland
  5. Dutch lower house approves EU-Ukraine treaty
  6. WTO says Russian pork ban was illegal
  7. Belgian nuclear plant made 'significant progress' on safety
  8. Report: Commission gauging EU support for Poland sanctions

Stakeholders' Highlights

  1. EURORDISJoin Rare Disease Day and Help Advocate for More Research on Rare Diseases
  2. European Healthy Lifestyle AllianceStudents Who Are Considered Fit Get Better Grades in School
  3. QS World MBA TourMeet with Leading International Business Schools in Paris on March 4th
  4. Malta EU 2017Economic Governance: Agreement Reached on Structural Reform Support Programme for Member States
  5. Socialists & DemocratsWomen Have to Work Ten Years Longer to Match Lifetime Earnings of Men
  6. Counter BalanceTrans-Adriatic Pipeline Is a Major Risk for Banks, Warns New Analysis
  7. Martens CentreEU and US Migration Policies Compared: Join the Debate on February 28th
  8. Swedish EnterprisesTechnology and Data Flows - Shaping the Society of Tomorrow
  9. UNICEFNearly 1.4 Million Children at Risk of Death as Famine Looms Across Africa and Yemen
  10. Malta EU 2017End of Roaming Fees: Council Reaches Agreement on Wholesale Caps
  11. Nordic Council of MinistersNordic Innovation House Opens in New York to Help Startups Access US Market
  12. Centre Maurits CoppietersMinorities and Migrations