Athens, 01/04/2014 (Agence Europe) - At their meeting in Athens on Tuesday 1 April, eurozone finance ministers said it is still too soon to discuss how Portugal is to exit its aid programme in the middle of May.
The head of Eurogroup, Jeroen Dijsselbloem, said the ministers would discuss Portugal's exit strategy on 5 May, after the end of the troika's last monitoring mission (the troika being the European Commission, the European Central Bank and the International Monetary Fund). He expected the payment of aid of €1.2 billion from the European Financial Stability Fund to take place on Thursday 24 April after the Portuguese government submits to Eurogroup its spending programme for 2015, which is the last remaining “prior action.”
Euro Commissioner Olli Rehn said the European Commission would prefer Portugal to request a preventative credit line from the European Stability Mechanism: “We are still of the view that it's 'better safe than sorry.' At same time there has been positive improvements of the PT economy and the perception of the market,” he said. Countries like Germany and Finland are reported to take the same view.
On Monday, the Portuguese statistics office reported that the country's public deficit was better than expected at 4.9% of GDP in 2013 (compared with the target of 5.5%, see EUROPE 11050). The yield on ten-year Portuguese bonds has fallen to 4%, due to restored money market confidence in Portugal. The country's financing needs are covered until the start of 2015.
The Portuguese coalition government, which will be fielding candidates for the European elections, may be tempted to score political points by exiting the aid programme without requesting further aid. In the event of economic problems or new financial turbulence, there is nothing to stop Portugal from requesting preventative aid at a later date, which would give it access to the ECB's “OMT” programme for the conditional but unlimited purchase of sovereign debt. (MB)