Portugal’s decision to repay IMF bailout loans ‘early’ has seen the institution change its tune over the country’s financial position.
Indeed, right now the IMF appears to see a brighter future for Portugal than even the Socialist government.
It sees “national wealth” likely to grow 2.5% this year, with the country “comfortably” meeting its 1.5% deficit target.
Said prime minister António Costa, the new position (“contrary to what the IMF thought a year ago”) shows Portugal’s strategy for turning the page on austerity is indeed working.
“We have heard the IMF present forecasts for the growth of our economy that are more optimistic than those that the government has been working on”, he told journalists.
President Marcelo too joined the national ‘delight’, stressing that the country’s economy would continue to grow, and unemployment would keep falling.
It appears to have been a coincidence that Portugal announced its earlybird repayments on the day the IMF published its latest report on the country’s financial position.
As Reuters news agency explains, Portugal has already repair €1 billion ‘early’ and “intends to repay early another €2.6 billion by August”.
Announcing the decision, the finance ministry said the early payments will have “no impact on planned debt issuance this year”, adding that Portugal plans to continue to pay off IMF bailout loans early next year as well.
Reuters explains that repaying “expensive bailout loans” early means Portugal “can now borrow in debt markets at lower rates”.
As for financial forecasts, the government announced in May that it sees the economy likely to grow by 1.8% this year. The OCDE predicts growth at 2.1%, the country’s Catholic University calculates 2.4%, and the ISEG has suggested anything between 2.4% and 2.8%.
The IMF’s 2.5% coincides with previsions made last week by the Bank of Portugal.