"Until the end of 2018, we will pay the totality of this debt to the IMF", the PM announced at the Parliament this Thursday morning.
Portugal will pay the remaining of the debt from the IMF by the end of this year, the Prime Minister, António Costa, announced in a speech at the Parliament this Thursday, on the occasion of the end of debates on the State Budget for 2019.
“We know we have a long road ahead of us. And we are here to keep building that road. The same determination we had governing this country, is the determination which allows me today to announce that we will, by the end of this year, pay fully the remaining debt we have with the IMF, which means a significant turn of yet another page [in our country’s history]”, the Prime Minister noted.
The crisis of 2010-2013 made the country ask for 78 billion euros to troika to rescue the country’s economy, €26.3bn of which were lent by the IMF. According to the IGCP by the end of October, €4.7 bn were missing, the equivalent to 17% of the total lent by the IMF.
The country had been trying to redeem this amount in advance, given the high-interest rates such a loan encompasses (interest rates on the IMF debt reached 4% at a certain point).
The same determination we had governing this country, is the determination which allows me today to announce that we will pay fully the remaining debt we have with the IMF, by the end of this year
Now, Portugal really has turned the page on the crisis, “enjoying job-rich economic recovery, driven by investment and exports”, the IMF reported in September, in their last assessment of the country.
The reference rate on the Portuguese debt to the IMF was now at 1.7%. To that, we add the spread of 110 base points, which is aggravated by the significant amount owed in comparison to the Portuguese debt quota.
The cost of this debt is therefore approximately 3% above its initial cost. In the markets, the country has been financed by an interest rate below 2%.
At the beginning of the month, the IGCP withdrew 1.25 bn euros in treasury bonds, aiming at refunding the IMF. However, the IGCP was planning to pay only 2bn euros in advance by the end of the year, meaning that more funds will be advanced to pay off the entire outstanding debt to the International Monetary Fund.