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As reported by the Financial Times (subscription), Portugal’s prime minister has announced that the country will make a "clean" exit from its three-year bailout without the safety net of a precautionary credit line. In a televised address on Sunday night, Pedro Passos Coelho said the decision to emulate Ireland by exiting Lisbon’s €78 billion rescue programme without the safety net of additional international support was the choice that would "best defend the interests of Portugal".
Lisbon is scheduled to wind up its adjustment programme on 17 May, six months after Ireland made a clean exit from its own three-year bailout. Lisbon’s decision leaves Greece and Cyprus as the only eurozone countries now under assistance after Spain also exited a bank bailout in January.
The Eurogroup welcomed the conclusion of the twelfth and final review mission by the Commission, the ECB and the IMF that Portugal's adjustment programme remains on track to be concluded and commends the Portuguese authorities for their successful implementation of the programme. The Eurogroup also commended the Portuguese people for their efforts and achievements under difficult circumstances. The success of Portugal's financial assistance programme also clearly illustrates our resolve to work together to ensure the cohesion and stability of the euro area.
The Eurogroup welcomes the programme achievements of consolidating public finances, stabilising the financial sector and bringing the economy back on a recovery path. Fiscal adjustment has been notable, as evidenced again recently by the significantly better than targeted budgetary outcome in 2013 and the confirmation of the 2014-2015 deficit targets. Wide-ranging structural reforms have helped to make the economy more flexible and competitive, significantly reducing external imbalances and rebalancing growth towards the tradable sector. This has contributed to confidence, the economic recovery and declining unemployment.
Full statement 5.5.2014
The Eurogroup supported Portugal's decision not to request any follow up programme. This decision follows the successful conclusion of the Portuguese programme's final review mission by the Commission, the ECB and the IMF. Ministers commended the Portuguese authorities for their successful implementation of the programme and the Portuguese people for their achievements under difficult circumstances.
The Eurogroup concluded that the programme has created the right conditions for Portugal to return to sustainable growth and job creation. The Portuguese economic recovery is strengthening. Wide ranging structural reforms have made the economy more flexible and competitive. The fiscal adjustment has been considerable and investor confidence has returned.
The Eurogroup encouraged Portugal to press ahead with reforms aimed at further enhancing the economy's capacity to generate jobs and growth. Portugal's commitment to maintaining a prudent fiscal policy was welcomed.
Full statement 6.5.2014
Commission President José Barroso commented:
"On the 17th of May, Portugal will exit the economic and financial adjustment programme put in place in 2011 with the support of the European Union and the International Monetary Fund. Portugal has announced it will do this without asking its international partners for a precautionary credit line. This is possible thanks to Portugal's rigorous implementation of the programme over the last three years, which has yielded impressive results.
It has not been a painless process - far from it - but it was unavoidable. I would like to praise the Portuguese people for the significant efforts and sacrifices they have made to build a better future. Their determination deserves our full respect.
With a clean exit from the programme, Portugal will now walk with his own feet. This is not only a success for Portugal but a success for Europe. Since Portugal joined the European Union in 1986, the European Commission has always been a loyal, dedicated and constructive partner to Portugal. The European Commission has remained at Portugal's side during the implementation of the adjustment programme. Moreover, Europe has provided two-thirds of the total financial assistance granted to Portugal in 2011. The European Commission will remain at Portugal's side following its exit from the programme.
The successful exit from the programme shows the immense capacities of Portugal and its people to work together to emerge stronger from the crisis. This should give Portugal the confidence it needs to be able to respond to the challenges that lie ahead, and to build a more prosperous and fair society."