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Portugal considers early repayment of IMF bailout loan

04 September 2014 18:20 (UTC +04:00)

Baku-APA. Portugal is considering paying off its financial bailout loan from the International Monetary Fund (IMF) ahead of schedule if euro zone finance ministers approve Ireland's proposal to pay off its own loan to the IMF, according to local media reports on Thursday, APA reports quoting Xinhua.

The president of the Eurogroup, Jeroen Dijsselbloem, Thursday told the European Parliament: "The Irish minister talked to me and to the other institutions involved. I think we will discuss the matter at our September meeting next week, based on Ireland's request which has yet to be officially filed."

Portugal intends to follow the Irish example. Early repayment by Portugal is under consideration following the success of recent Portuguese sovereign debt issues, with interest rates on treasury bonds falling sharply.

This change in Portugal's favor means that replacing the IMF loan with treasury bonds would be more advantageous to the debt-laden country.

Early repayment of the IMF's portion of the 2011 bailout loan would save the Portuguese treasury around 400 million euros (520.2 million U.S. dollars) in interest payments between 2015 and 2016.

Earlier this week, Portugal issued 3.5 billion euros of 15-year bonds at a rate of 4 percent, with demand exceeding 8 billion euros.

However, bailout programs signed with the EU, IMF and European Central Bank stipulate that all creditors must be repaid on an equal basis and early repayment of the IMF needs the backing of the euro zone and all the countries of the European Union.

Portugal signed a 78 billion euros bailout program with the troika in 2011.

The program officially ended in May this year with a "clean exit" or no credit line.

However, the troika will continue to monitor the country with its first post-bailout review due in October of this year. Under European law, reviews are carried out until at least 75 percent of the bailout loans are paid off.

A meeting of euro zone finance ministers is scheduled for Sept. 12 and 13 in Milan, Italy.