The euro zone bailout fund on Wednesday authorised Portugal to repay the International Monetary Fund ahead of schedule around 9.4 billion euros ($10.7 billion) owed under a joint EU/IMF bailout, allowing the country to save on interest payments.
The euro zone bailout fund on Wednesday authorised Portugal to repay the International Monetary Fund ahead of schedule around 9.4 billion euros ($10.7 billion) owed under a joint EU/IMF bailout, allowing the country to save on interest payments.
By approving at its board meeting Portugal's request received last month, the European Financial Stability Facility (EFSF) waived its right to be repaid early alongside the IMF.
"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," EFSF CEO Klaus Regling said in a statement.
In its request, Lisbon did not say when it would make new payments to the IMF. Portugal started early repayments to the IMF in 2015 to save on interest payments after it exited the bailout programme and has already reimbursed half of the loans provided by the Fund.
"I encourage 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," Regling said.
Portugal, which exited the bailout in 2014, still has one of the euro zone's highest public debt levels at around 130 percent of GDP.
The IMF came up with about a third of the 78 billion euro bailout. The IMF's portion carries higher interest payments than both the EU's part and current market rates, and Portugal has been repaying the costlier debt early by issuing bonds.
Portuguese bond yields have fallen since the start of the year to around 3 percent after the country posted in 2016 its lowest budget deficit in more than four decades and as economic growth picked up in the first quarter of this year. ($1 = 0.8789 euros) (Reporting By Andrei Khalip, editing by Axel Bugge and Toby Davis)
(This article has not been edited by DNA's editorial team and is auto-generated from an agency feed.)
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