Brussels, 19/05/2014 (Agence Europe) - On Saturday 17 May, the European Commission welcomed the end of the Portuguese financial bailout programme, a drastic structural adjustment programme in return for €78 billion in financial aid.
Commission vice-president Siim Kallas said: “Thanks to the determined efforts of the Portuguese authorities and the resilience and courage of the Portuguese people, major progress has been made in addressing the economic imbalances that have been weighing the country down for many years. Decisive action was taken by the Portuguese government to put public finances back on a sustainable trajectory. The financial sector has been stabilised and strengthened. Structural reforms in many sectors of the economy have begun to lift Portugal's competitiveness and remove obstacles to investment and job creation.”
The Commissioner warned: “There is no cause for complacency. To deliver a more robust recovery and bring down the still unacceptably high level of unemployment, it will be essential to maintain an unwavering commitment to sound budgetary policies and growth-enhancing reforms in the months and years ahead.”
In mid-May, the Portuguese government announced that it was planning to exit the aid plan without any preventative aid in the form of a credit line at the European Stability Mechanism (see EUROPE 11072). During the post-programme period, lender representatives will make six-monthly monitoring missions until Portugal has paid back 75% of the debt contracted from them over the past three years. Portugal has already covered its financing needs for the rest of the year.
From 2010 to 2013, Portugal's wealth shrank by 6%. In 2014, it will return to economic growth of 1.2% of GDP and the public deficit will be reduced from 4.9% of GDP in 2013 to 4% this year, along with the emergence of a primary budget surplus (not including debt servicing costs) of 0.4%. The country's public debt will rise above 130% of GDP before beginning to fall next year. Unemployment is expected to fall from a high of 16.3% of the working population to 15.4%. (MB)