Airport sale helps Portugal cut defict to 5.0%

Portugal cut its swollen public deficit to 5.0 percent of output last year, honoring a pledge to international creditors with funds raised though the sale of a major airport stake to the French group Vinci, budget officials said on Thursday.

Lisbon has accorded management rights to the airport operator ANA to Vinci for 50 years, a deal announced in late December that covers roughly a dozen Portuguese airports.

As part of the agreement, Portugal sold 95 percent of ANA’s capital to Vinci for 3.08 billion euros ($4.1 billion), with 800 million euros of the total turned over last year, more than the initially expected sum of 600 million, a finance ministry document showed.

That allowed the country to trim the deficit to 5.0 percent of gross domestic product (GDP), a condition in a revised agreement reached last year with the European Union and International Monetary Fund, the budget officials said.

Lisbon has committed itself to reducing its deficit to 4.5 percent of GDP this year, still well above the EU ceiling of 3.0 percent.

Portugal was granted a financial rescue package worth 78 billion euros in May 2011, in exchange for which the government pledged to straighten out its finances via austerity measures and economic reforms.

The EU’s statistics service Eurostat has not yet said however if it will allow the airport funds to be included in the calculation of Portugal’s public debt.

Meanwhile, the country said on Wednesday that it had succesfully raised 2.5 billion euros with a five-year bond issue, marking its return to private equity markets for medium-term debt, a major step on the path towards fiscal health.

Investor demand for the Portuguese debt was more than six times the initially offered amount of 2.0 billion euros, allowing Lisbon to boost the operation by an additional 500 million.