Portugal was given the green light to make the early repayment to the IMF

Portugal has the green light to move forward with the early repayment of over ten billion euros to the International Monetary Fund (IMF). The member-states allowed these new payments: the first payment of one billion euros should be made by the end of this month.

"I welcome Portugal’s intention to make early repayments on its IMF loan and I am pleased that the Board of Directors of the EFSF has today decided to authorise and support this plan.”

On May 23, in Brussels, the Portuguese Government requested its European partner’s permission to make and early repayment to the IMF of 9.4 billion euros out of the loans granted during the financial aid programme. The answer was given by the European Financial Stability Facility: “The EFSF Council approved the Portuguese request”.

“I welcome Portugal’s intention to make early repayments on its IMF loan and I am pleased to announce that the Board of Directors of the EFSF has today decided to authorise and support this plan“, stated Klaus Regling, EFSF president. Mário Centeno, the Portuguese Finance minister, had previously stated that as soon as he had permission, Portugal would make another one billion euro’s reimbursement, ideally in June.

“These early repayments will lower Portugal’s debt service costs, improve its debt sustainability and send a positive signal to the markets of Portugal’s improved financing conditions”, Regling adds, highlighting “this is good for Portugal and for the EFSF as its biggest creditor, because it helps to put Portugal in a better economic position to honour its future loan obligations”.

Klaus Regling continues by stating he encourages “Portugal to use any additional fiscal space, such as that created by this early repayment or resulting from good economic performance, to further reduce its debt level“. The country’s gross debt is at 247 billion euros, the equivalent to 130.6% of GDP.