Portugal decides on 'clean exit' from bailout

Sun May 4, 2014 5:18pm EDT
 
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By Sergio Goncalves

LISBON (Reuters) - Portugal said on Sunday it would exit its three-year 78-billion-euro bailout this month without a precautionary credit line, as the country returns to growth after years of painful austerity and unpopular reforms.

The cabinet decision was announced by Prime Minister Pedro Passos Coelho in a televised address to the nation and means the country will no longer have to answer to foreign creditors after the bailout ends on May 17.

"The government has decided to exit the assistance program without turning to any kind of precautionary program," Prime Minister Pedro Passos Coelho said, flanked by his entire government which met Sunday to make the decision.

"This is the right decision," he said, adding that Portugal's European partners would back whatever decision the government took. Portugal is the second euro zone country after Ireland to exit an assistance program.

"The European Commission takes note of this decision and, as previously stated, will support the Portuguese authorities and people in this sovereign choice," said Siim Kallas, vice-president of the European Commission, in a statement.

Lisbon is set to formally communicate the decision to the Eurogroup of finance ministers at a meeting on Monday.

The decision to exit the bailout without a security net is a major success for the government, which has won over investor confidence by sticking to the harsh austerity and reforms required by the bailout. Lisbon was forced to seek the bailout from the European Union and IMF in 2011.

"By agreeing to adopt what was imposed by the international creditors, Portugal won the ticket to get a free ride from the strong international recovery," said Filpe Garcia, head of the Informacao de Mercados Financeiro consultancy.   Continued...

 
Portugal's Prime Minister Pedro Passos Coelho makes a statement accompanied by his ministers at St Bento Palace in Lisbon May 4, 2014. REUTERS/Rafael Marchante