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Portuguese Prime Minister Pedro Passos Coelho, pictured during a press conference at the EU Headquarters in Brussels, on November 6, 2013/AFP

Finance

Portugal won’t need a second economic bailout

Portuguese Prime Minister Pedro Passos Coelho, pictured during a press conference at the EU Headquarters in Brussels, on November 6, 2013/AFP

Portuguese Prime Minister Pedro Passos Coelho, pictured during a press conference at the EU Headquarters in Brussels, on November 6, 2013/AFP

LISBON, Dec 13 – Portuguese Prime Minister Pedro Passos Coelho said Thursday his debt wracked nation would be able to return to the financial markets without having to seek a second economic bailout.

Portugal must return to financing itself on debt markets when its 78 billion euro ($107 billion) bailout programme expires in June, but many economists question whether it can make it on its own and say the country may need further EU support.

“During the past two years we have produced results that exempt us from the necessity of a second bailout programme,” Passos Coelho said in radio and television interviews.

He said Portugal faced two scenarios as it makes its exit from the programme, accessing a short term EU credit line, or making a clean break like Ireland is doing this month, by returning to the markets without additional help.

“I am not excluding either of these possibilities,” said Passos Coelho, adding that the exit from the bailout programme would be discussed with international creditors from January.

Portugal’s creditors from the European Commission, the European Central Bank and the International Monetary Fund last week began a review of the reforms the country has carried out in exchange for the aid.

Passos Coelho said the exit was “not on the agenda”.

The payment of the next instalment of loans of 2.7 billion euros depends on a successful review of the country’s progress in implementing economic reforms.

While all three of Portugal’s main political parties backed the initial bailout agreement, Passos Coelho’s centre right government has faced a growing backlash against austerity measures.

The prime minister has criticised a lack of coherence between the position of IMF leaders and the practices of its technical experts.

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IMF chief Christine Lagarde has acknowledged that the troika of creditors demanded of Portugal “too much budgetary consolidation, too fast”.

However Passos Coelho said this “was not consistent with decisions taken during negotiations with troika experts”.

During the last review the troika denied Portugal’s bid for an easing of the country’s 2014 public deficit reduction target from 4.0 percent to 4.5 percent of GDP.

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