Portugal Approaches Bailout Exit Following Positive Economic Review
Portugal is moving closer to concluding its financial bailout program as international lenders, who played a pivotal role in preventing the country from going bankrupt, have authorized an early assessment of its economic situation. This review was completed six months ahead of schedule and comes as Portugal continues to implement reforms mandated by the 2011 bailout agreement valued at €78 billion (£66 billion).
Path to Recovery
The European Union (EU) and the International Monetary Fund (IMF), also known as the ‘troika’, have been closely monitoring Portugal’s economic reforms. These measures are central to the conditions set during the loan agreement five years ago. With aspirations to exit the bailout by mid-2014, Portugal recently observed Ireland become the first eurozone nation to exit a similar program, a move that may serve as an encouraging precedent.
Maria Luis Albuquerque, Portugal’s finance minister, expressed optimism regarding the assessments: “The lenders agreed that our targets were met and our objectives are within reach,” she noted, adding that the evaluation process was notably smooth. “It envisages the end of the bailout programme on the agreed date,” she confirmed.
Financial Independence on the Horizon
Successfully exiting the bailout program would allow Portugal to regain its financial independence, enabling it to seek funds from the financial markets once again. For a significant period during the recession, access to capital markets was virtually closed to Portugal, primarily due to exorbitant interest rates that were deemed unsustainable.
As of this moment, Portugal has drawn down €71.4 billion from the original €78 billion loan package provided by the troika in May 2011.
| Year | Economic Growth (%) | Unemployment Rate (%) |
|---|---|---|
| 2013 | -1.8 | 16.2 |
| 2014 (Projected) | 0.8 | 15.0 |
Signs of Economic Improvement
Recent assessments by the troika indicate that indicators of economic recovery have emerged since the last review. The organization noted that growth expectations align with projections, while unemployment rates have declined more significantly than anticipated.
Portugal’s next steps will have critical implications not only for its own economic landscape but also for the stability and health of the eurozone as a whole. The progress made so far is seen as a positive sign for other nations grappling with similar financial constraints.
