According to IGCP's Note to investors, the Portuguese Government requested permission to accelerate the reimbursements to IMF, aiming to pay 9.7 billion euros in the next two and a half years.
Portugal aims to pay the remaining loan from the International Monetary Fund (IMF) by the end of 2019. The same is to say that over the next two and a half years, the Portuguese Government intends to reimburse the 9.7 billion euros it still owes the Fund, requested in 2011 international bail out.
The information is found in a Note to investors from the IGCP, the Portuguese Debt Management Agency, after the State undersecretary and Finance secretary Mourinho Félix disclosed earlier this week that the Portuguese Executive had formally made that request to its European partners, after Brussels recommended that Portugal leaves the Excessive Deficit Procedure (EDP).
With this early reimbursement, the Government and the IGCP seek to decrease the financing costs of the Portuguese debt, replacing the IMF loan in which the country pays interests surpassing the 4% threshold with resort to the capital markets with more favorable conditions. The ten-year debt rate is currently negotiating at 3.2%, for example.
In this Wednesday’s Note to investors, the IGCP discloses that they have “already raised more than 55% of the PGB [Treasury bonds] issuance targeted for 2017”, namely 15 billion euros since the beginning of the year. “[IGCP] has almost covered all the 2017 borrowing needs”, also states the agency head by Cristina Casalinho. Therefore, “upcoming issuances will mainly serve to sustain a comfortable cash position and pre-finance 2018 borrowing needs”, discloses the Note.
According to IGCP‘s projections, 2017 will close “with a cash position (excluding cash-collateral) between €6.5 bn and €7.5 bn, in line with the level observed at end-2015”.
Finance Minister wants a 100% debt to GDP ratio in ten years
Mário Centeno believes the Portuguese public debt-to-GDP ratio could decrease to 100% in ten years, if Portugal maintains its current growth rhythm.
Since Portugal left the Excessive Deficit Procedure, the Portuguese Finance Minister also expects an improvement in Portugal’s financial rating by the end of this year: “It will indeed be an extremely important step in the consolidation of this process”, Centeno states in an interview to RTP1.