Portugal plans to make an early payment on IMF loans

Prime minister Pedro Passos Coelho announces move as borriwng costs fall

Pedro Passos Coelho: “The market conditions that Portugal has access to now are more favourable that those agreed on with the IMF and therefore we will save in the future by paying part of the IMF loan early.”  Photograph: Krisztian Bocsi/Bloomberg

Pedro Passos Coelho: “The market conditions that Portugal has access to now are more favourable that those agreed on with the IMF and therefore we will save in the future by paying part of the IMF loan early.” Photograph: Krisztian Bocsi/Bloomberg

 

Portugal plans to make an early payment of about €14 billion of its bailout loans from the International Monetary Fund after borrowing costs dropped, prime minister Pedro Passos Coelho said.

“The market conditions that Portugal has access to now are more favourable that those agreed on with the IMF and therefore we will save in the future by paying part of the IMF loan early,” Mr Coelho said.

The Portuguese government received its bailout from the European Union and IMF in 2011 and followed Ireland in May when it exited the aid plan without the safety net of a precautionary credit line.

On January 21st it announced plans to also follow Ireland by making an early payment of the IMF loans.

Portugal has €78.1 billion in loans from the EU and the IMF with an average interest rate of 2.9 per cent, according to debt agency IGCP. IMF loans of €26.5 billion have an estimated rate of 3.6 per cent and an average maturity of 7.25 years.

The Portuguese 10-year bond yield reached 2.19 percent yesterday, the lowest since Bloomberg began collecting data in 1997. That yield was at more than 18 per cent in 2012.

– (Bloomberg)