Portugal bailout programme is on track
LISBON, Portugal – Portugal is complying with conditions attached to a (euro) 78 billion ($9 trillion) international bailout it received last year, the country’s finance minister and foreign lenders said yesterday.
That assessment ensures Portugal will receive its next installment of (euro) 14.6 billion, bringing the total so far to (euro) 48.8 billion after the country passed previous compliance tests, Finance Minister Vitor Gaspar said.
“The inspectors made a positive assessment of Portugal,” Gaspar told a news conference.
Inspectors from the bailout lenders — the International Monetary Fund, the European Central Bank and the European Commission — said in a statement that “Portugal is making good progress toward adjusting its economic imbalances.”
Portugal’s high debt load and feeble growth spooked investors last year, pushing the country close to bankruptcy and leaving it unable to raise loans on international markets at an affordable price. All three major international ratings agencies classify Portuguese debt as junk.
Portugal’s financial difficulties contributed to the sovereign debt crisis that has tormented the 17-nation eurozone for the past two years.
The center-right government that came to power in June is keen to show it is honoring its commitments on debt reduction and economic reform despite a steep recession and record unemployment of 14 per cent.
The Portuguese government and European leaders want to avoid a repeat of the problems in Greece, where authorities missed targets and the country ended up needing a second bailout that renewed political and financial tensions in the bloc.
Inspectors from the lending organizations spent the last 10 days conducting a regular review of Portugal’s progress since they granted it a financial rescue package eight months ago.
Gaspar said the center-right coalition government will stick with its austerity program, which includes tax hikes and pay and welfare cuts, even though the measures are widely blamed for intensifying economic difficulties.
Portugal went into a double-dip recession last year and is expected to contract further this year — Gaspar announced the government is revising its growth forecast for this year from a contraction of 2.8 per cent to a steeper 3.3 per cent. He said the jobless rate is expected to reach 14.5 per cent in 2012.