Portugal follows Ireland out of bailout programme
Europe Sun Sunday 18th May, 2014
Portugal has become the second country after Ireland to end its bailout programme.
Portugal was on the edge of insolvency in 2011 when it signed up to a 78 billion euro austerity commitment with the European Commission, European Central Bank and International Monetary Fund.
Portugal exited the programme on Saturday having ironed out a series of imbalances and putting the economy back on a positive trajectory. Unemployment currently is running at 15.3 percent but this is lower than the 18.5 percent three year programme targeted.
Portugal, like Ireland, rigorously adopted a series of measures designed to put the country's economy back on track. Ireland exited the programme late last year.
German Finance Minister Wolfgang Schaeuble noted on the weekend that Portugal's exit showed the European crisis resolution strategy is working.
"Steadfast program implementation has allowed Portugal to bring its economy back on track, put public finances on a path to sustainability, and reduce imbalances that had been building up before the crisis," Schaeuble said in a letter he forwarded on Saturday to Portuguese Finance Minister Maria Luis Albuquerque.
"Of course Portugal still faces important challenges, including with regard to sustaining fiscal consolidation over the medium term and continuing growth-enhancing structural reforms," he said.
The Portuguese government on Saturday was upbeat but committed to maintaining the momentum of the austerity measures. "We reaffirm before the Portuguese and the world that the end of the programme does not mean the end of the reformist momentum. We want everyone to know that we will not stop," Carlos Moedas, assistant secretary of state to the prime minister, said.
The statement was a sign the country's mid-term reform strategy titled "Road for Growth" would continue despite the clean exit from the troika of international creditors.
Portugal's "clean exit" comes after a string of successful bond sales which reflected greater investor appetite, making it the second country following Ireland's footsteps without a recourse to a precautionary credit line.
Last month, the country held its first un-syndicated debt auction since 2011 and raised the maximum 750 million euro in 10-year bonds, auctioned at a better-than-expected yield of 3.57 percent.
The Portuguese economy has shown signs of recovery, despite a 0.7 percent contraction in the first quarter of this year compared with the previous three months, announced by the National Institute of Statistics Friday.
Portugal's export performance has boosted the balance sheet with the country's current account moving into positive territory for the first time since the late 1960s, and unemployment fell for a third quarter to 15.3 percent.
However, the country still has a staggering debt burden of 129 percent and faces significant challenges on the road to full economic recovery.
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