Portugal’s planned €10 billion payment to the IMF shows that the financial rescue of the country has been a "success story," according to German Finance Minister, Wolfgang Schauble.
"I sent the request from Portugal to the German parliament, which has to approve it, but I am sure there will be no problem. This shows that the assistance programme for Portugal is a success story," Schauble said on the way to today's meeting of euro-zone finance ministers.
Portugal had requested authorization to pay a chunk off its IMF loan which was costing 4.3% in interest. The government is to replace the €10 billion by borrowing more money, but at a more competitive 3.1%. This is good housekeeping rather than having a spare €10 billion to reduce that nation's overall borrowing which remains uncomfortably in excess of 130% of GDP.
Early repayment of any of the bail-out loans requires the endorsement of the Member States whcih have to agree to ignore a clause in the loan agreements which states that any early repayments must be proportionate to all creditors.
The Secretary of State for Finance, Ricardo Mourinho Felix, commented that, "The rate we are paying the IMF is 4.3%, when today the 10-year rates, with a longer maturity date, are at 3.1%," who considered that it is, "more good news for Portugal and also for investors in Portuguese debt."
Since Portugal began paying off its IMF loan early in 2015, more than €14.5 billion has been sent from the €26 billion borrowed in 2011.
The remaining €52 billion owing to other European lenders involved in Portugal’s bail-out remains outstanding.
