Portugal decides to exit from EU-IMF bailout

Following Ireland, Portugal yesterday made a clean break from its EU-IMF bailout by foregoing a credit line as it prepared for a full return to the credit markets.

The decision was taken at an evening cabinet meeting, following the country passing the final bailout audit by EU-IMF experts on Friday, thereby closing out the essential part of its €78-billion three-year rescue.

"The government decided that we will exit our rescue programme without resorting to any precautionary programme," prime minister  said during a television broadcast following the meeting surrounded by his ministers.

He added, the decision was the "best for the interests of Portugal" after the country "regained its credibility."

The European Commission applauded the decision and said it would "support the government and the Portuguese people".

According to Christine Lagarde, the head of the International Monetary Fund, the decision meant "Portugal is now able to complete the consolidation of public finances".

Portugal was now set to emerge from the bailout on 17 May and was expected to try to finance itself on bond markets without a so-called safety net, becoming the second affected eurozone country to take the course after Ireland.

Meanwhile, according to The New York Times, many economists credit Portugal's turnaround - partly to the booming exports, that had helped the country rebalance its trade, which stands out when compared with progress in other ailing euro zone economies.

The newspaper quoted Ralph Solveen, an economist at Commerzbank as saying he thought Portugal did the right things. He said its outlook was much brighter than that of Greece.

The international lenders noted in their review of Portugal's progress, that ''exports continue to drive economic growth, while private investment and consumption have also started to pick up.''

A further decline in unemployment was also projected by the lenders even as the jobless rate was still about three percentage points higher it was than before the bailout.

In 2011, Portugal became the third euro economy to negotiate an international bailout after Greece and Ireland with the then Socialist government finding itself struggling to meet its debt payments as costs of borrowing soared.