Embassy of Portugal in Israel

Ministry of Foreign Affairs

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PORTUGAL PREPAID 1,7 BILLION EUROS OF THE IMF LOAN, EVIDENCING THE ECONOMY’S ROBUSTNESS

Portugal prepaid 1,7 billion euros of the IMF loan, evidencing the economy’s robustness

Last week, Portugal prepaid an additional tranche of the IMF loan, equivalent to 1,7 billion euros, with an original maturity of 2019.

With this operation, Portugal concluded the prepayment of half of the total IMF loan, thus taking advantage of the waiver granted by the EU institutions in February 2015. The prepayment completed about six months ahead of schedule, reflects the robustness of the economic and financial conditions in Portugal.

Regarding last year’s evolution, a consensus is emerging that Portugal is turning the corner from the crisis. Economic reforms and adjustments underpin a recovery that has positively surprised many observers. The main international institutions (OECD, European Commission, IMF) have in their reports highlighted the progress Portugal has achieved in economic and financial prospects.

The recovery of the Portuguese economy in the second half of 2016, prompted positive revisions to growth forecasts by international organizations. The labor market continued to improve strongly, with employment growth and sustained reduction in unemployment, which is key to maintain a broad consensus on the ongoing reforms.

Portugal has met the budget targets, it reached in 2016 the lowest overall deficit since 1974 and the highest primary balance since 1992. The 2017 fiscal year will maintain this positive trend.

The reports of international organizations note that the external rebalancing of the economy has been successful and sustainable, as evidenced by the improvement in the current and capital account surplus. External debt declined steadily and the International Investment Position of the Portuguese economy also improved significantly in 2016.

Banking sector difficulties have been identified over the years as a vulnerability. The reports on Portugal also highlight the progress accomplished and refer to the continued monitoring. As elsewhere in Europe, banks require permanent attention. A combination of solutions has been implemented over the past year, including rehabilitation measures and the opening of banks' capital to solid international investors.

Last, international institutions encouraged all countries to prepare for a potentially more uncertain international economic and financial environment. In this regard, the significant improvement in the Portuguese public debt structure (longer, cheaper and in a more diversified investor base) is a key source of resilience in such an environment.

Overall, Portugal has generally under-promised and over-achieved, earning increased credibility over time.

Lisbon, 20th of February, 2017

http://www.portugal.gov.pt/media/25400886/20170220-mf-pagamento-fmi-ingles.pdf

EUROPEAN COMMISSION WINTER FORECAST - PORTUGAL

European Commission Winter Forecast - Portugal
 
In the Winter Forecast, the European Commission (EC) acknowledges the success of the economic strategy implemented by the Portuguese Government. The Commission improves the majority of the 2016 and 2017 projections when compared to their latest Autumn Forecast.
The deficit projection was revised downwards by 0.4 p.p. in 2016 and by 0.2 p.p. in 2017. Portugal will exceed the deficit targets it committed to. Growth was revised upwards to 1.3% in 2016 (from 0.9%) and to 1.6% in 2017 (from 1.2%). The EC forecasts came closer to those of the Government and, in the case of economic growth and unemployment, even surpasses them. This confirms the conservative approach adopted by Portugal in the 2017 State Budget.
The Commission also improved its projection for the structural adjustment in 2016 from -0.1% to 0%. However, the final deficit numbers for 2016 will render the improvement in the structural balance even stronger.
The EC confirmed the sustainability of the growth pattern of the Portuguese economy, which will maintain an external surplus over the projection horizon. It also recognized the pick-up signs in private investment by the end of 2016 and early 2017, which builds on increased competitiveness of Portuguese goods and services, confidence and improved credit conditions. The reinforcement of the investment environment and the stabilization of the financial sector remain top priorities for the Government.
Throughout the forecast horizon, the deficit will remain clearly below 3% and the debt ratio will decline. As such, the durable and sustainable correction of the deficit guarantees the abrogation Excessive Deficit Procedure this year.
 
Lisbon, February 13, 2017
 

Contacts

3 Daniel Frisch Street
Telavive Israel 64731
(Embassy)
(00972) (0)3 6956372 (Embassy)
(00972) (0)3 6956373 (Embassy)
(00972) (0)3 6956361 (Embassy)
telavive@mne.pt (Embassy)
sconsular.telavive@mne.pt (Consular Section)

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