As the troika returned to Portugal for its 11th bailout review – expected to last up to two weeks – the European Commission has pronounced on the country’s recovery so far.
A little like saying “sunny with a chance of rain”, Reuters news agency reports that the EC said on Thursday that Portugal’s bailout programme remains “broadly” on track with “significant” risks.
The outlook was based on the commission’s summary of the 10th review of Portugal’s performance under the bailout, which took place in December.
“While the baseline projection implies that the recovery becomes gradually more entrenched, downside risks remain significant,” were the commission’s actual words.
The risks “first and foremost of a legal nature” are anticipated as the Constitutional Court debates a number of austerity measures from this year’s budget that have been challenged by the opposition, says Reuters.
At the same time that the EC made its declaration, the IMF released a statement alluding to the “formidable challenges” that still lie ahead for the Portuguese government.
Reuters continued: “The government has not played down the challenges” and has done well so far, issuing two bonds this year and covering “all of this year’s financing needs”.
Also hedging bets on Portugal’s economic recovery is ratings agency Fitch. It balked at raising Portugal’s credit rating from “junk” to investment grade, said the news agency, simply saying that Portugal is “moving in the right direction”.
Fitch is another institution that suggests Portugal would benefit from a precautionary credit line once the bailout ends in May this year, adds Reuters.
