Portugal: State debt agency now expects to repay €1.7bn to IMF this year

Page created: Friday, 10 February 2017 8:53 GMT

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Lisbon, Feb. 9 (Lusa) – The Portuguese state now expects to repay €1.7 billion in loans from the International Monetary Fund that were granted as part of a euro-zone bailout – more than originally foreseen in January, the state debt management agency, the IGCP, said in a statement on Thursday.


In its monthly note to investors, the agency said that it aims to repay €1.7 billion to the IMF this year, rather than €1.5 billion as it had estimated in January.


At the same time, the IGCP notes, the public sector borrowing requirement for the year is now projected to be greater than previously expected, at €21.1 billion, or €800 million than estimated last month.


For 2018 and 2019, the IGCP still expects to repay €3.5 billion and €1.5 billion respectively to the IMF, while for 2020, it anticipates the repayment of €2.5 billion, rather than the €2.7 billion it had projected in its January note.


The last early repayment to the IMF, of €2 billion, took place in November. At the time, the government said that the Portuguese state had paid back early 42.6% of the total initial loan.


Countries have a strong incentive to make early repayments to international institutions if the market yields on government bonds are lower than the interest rates on the loans, as has been in the case in recent months for Portugal.


Portugal officially exited the bailout in May 2014, but both the IMF and the European Commission are continuing to send regular missions to the country until the bulk of the loans are repaid.


European Union rules determine that when a country has exited a bailout it remains under surveillance until at least 75% of the amount received is repaid, with commission envoys being sent in twice yearly.


In the case of the IMF, its post-bailout rules state that countries will continue to be subject to monitoring until the amount outstanding is less than 200% of the country’s stake in the Fund.