'Portugal Laden With $293 Billion Debt Exits Bailout Plan' read the Bloomberg headline followed by a no-nonsense analysis of Portugal's progress and financial exposure.
"Portugal exited its international bailout program yesterday, regaining the economic sovereignty the nation lost after the European debt crisis erupted while facing enduring challenges to its finances.
The Iberian country’s €214 billion of debt is the third highest in the euro region as a percentage of gross domestic product. The economy is about 4% percent smaller than in 2010, a year before the government had to ask for an international rescue. Borrowing costs based on 10-year (GSPT10YR) bond yields are almost twice those of France and all three major ratings companies consider the country non-investment grade.
“There will now be two or three decades of lean times for the state, which will have to purge that debt burden,” said Diogo Teixeira, chief executive officer of Optimize Investment Partners, a Lisbon-based firm that manages 87 million euros in assets including Portuguese government debt. “The debt burden is sustainable, but it’s heavy.”
"I hope that everyone has learned that it’s not by following a path of squandering, spending what we don’t have and doing everything that is contrary to the sustainability of the economy that we can improve the wellbeing of the Portuguese,” Luis Marques Guedes, Portugal’s minister for parliamentary affairs, said last week.
“We are on the right path to never again allow Portugal to go through another collapse, another rescue, another national emergency,” PM Coelho said in a televised address on May 4, flanked by his ministers. “May 17, 2014, will stay in our history as a day of paying tribute to all the Portuguese, because without their effort it wouldn’t have been possible.”
To read the full report:
The Voice of Russia has some choice comments too: in an article titled 'Portugal: still poorer following second EU bailout exit after Ireland'
"After three years of austerity, Portugal is exiting its international bailout, becoming the second EU country to do so after Ireland, which left without the need for a credit safety net. Nevertheless, Portugal’s political opposition and unions say the country is in worse shape than before the bailout despite the fact that the government and the "troika" of international lenders call it a success.
The International Monetary Fund has acknowledged that the impact of austerity on the economy was greater than it had anticipated.
In return for the 78 billion euros of loans it asked for in 2011, Portugal’s austerity cuts will total 30 billion euros by 2015 - 12 billion more than originally calculated and almost 18 percent of Portugal’s gross domestic product (GDP).
Cuts in wages and social payments, as well as higher taxes meant consumption fell, along with investment and unemployment reaching record highs.
The jobless rate has now declined, but was still at 15.2 percent of the workforce in March. Youth unemployment was 35.4 percent, while Portugal is seeing an exodus of emigrants, especially skilled young people."
Reuters reported on the German Finance Minister's good wishes
"German Finance Minister Wolfgang Schaeuble congratulated Portugal for exiting its bailout programme in a letter made available to Reuters on Saturday, acknowledging reforms had not been easy but would eventually pay off.
The 78-billion-euro (63 billion pounds) international bailout imposed years of austerity on Portugal's citizens and around 15 percent of the workforce are unemployed as the country takes back control of its finances from the European Commission, European Central Bank and International Monetary Fund.
Portugal is the second euro zone state after Ireland to exit a full bailout, having stuck to the European Union's recipe of belt-tightening to beat the euro zone crisis.
"Steadfast programme implementation has allowed Portugal to bring its economy back on track, put public finances on a path to sustainability, and reduce imbalances that had been building up before the crisis," Schaeuble wrote in the letter addressed to Portuguese Finance Minister Maria Luis Albuquerque.
The exit showed "the European crisis resolution strategy is working," he added.
The rescue programme assembled in 2011 for the nearly bankrupt country concluded with Portugal's budget in much better shape and borrowing costs at eight-year lows.
But a shock 0.7 percent drop in its GDP in the first quarter pointed to the risks inherent in an economic recovery plan which, by focusing on fuelling export growth by cutting labour costs, has become dependent on volatile foreign demand.
"Of course Portugal still faces important challenges, including with regard to sustaining fiscal consolidation over the medium term and continuing growth-enhancing structural reforms," he wrote.
"I am reassured by the government's reaffirmed commitment to tackle remaining vulnerabilities with unchanged determination."
Now that its lenders have stopped reviewing the economy, Portugal can change policies more freely, even if still needs to gradually reduce the budget deficit under EU rules.
The government has already said it will partly reverse salary cuts in the public sector in the next few years and it is considering cutting taxes next year
