Schäuble: Early repayment to the IMF shows that Portugal’s bailout is a “success story”

  • ECO News
  • 16 June 2017

Portugal requested Brussels' permission to repay 10 billion euros in advance to the IMF. And that is a sign of "success", says the German Finance minister.

Portugal’s intention of making an early repayment of 10 billion euros to the International Monetary Fund (IMF) shows that the Portuguese aid programme is a “story of success”, says Wolfgang Schäuble, German Finance Minister, in this Wednesday’s Eurogroup meeting.

“I have sent Portugal’s request to the German Parliament, who must approve it, but I am sure there will be no problems. This only shows that Portugal’s [aid] programme is a success story“, stated Schäuble before entering the Eurogroup meeting in Luxembourg.

During the previous EU Finance ministers’ meeting, on May 23rd, the Portuguese Government requested its European partners’ permission to make an early repayment to IMF of around 10 billion euros, concerning the loans granted during the financial aid programme.

The early repayment to IMF needs to be approved by the Member States, because they have to renounce to a clause in the contracts about the loans granted in the financial aid programme framework, which predicts early repayments have to be proportional among all creditors (and Portugal only intends, once again, to make the early repayment to the International Monetary Fund).

Ricardo Mourinho Félix, the Portuguese Finance State secretary, pointed out that the early repayment to IMF will allow, on the one hand, to “make a more balanced management of future payments” — which will “surely make financing easier”. On the other hand, it will allow a “more adequate debt maturity management, at a significantly lower cost”.

“Portugal is paying the IMF a 4.3% rate, when today, ten-year rates, a much larger maturity, are at 3.1%”, the State secretary highlighted. For that reason, he considers this is “another great news for Portugal and also for Portuguese debt investors”.

Since Portugal began the early repayment of part of IMF’s credit, in 2015, over 14,500 million euros have been reimbursed out of the overall 26 billion euros granted by the institution headed by Christine Lagarde during the 2011 financial bailout. The remaining 52 billion euros were loaned by European creditors through the European Financial Stability Facility and the European Financial Stabilization Mechanism.