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Eurozone hails Portugal exit from debt rescue

The head of the eurozone finance ministers group congratulated Portugal on Monday on its exit from a massive debt-rescue but said it must hold to promised reforms to realise its potential.

“I would like to congratulate Portugal,” Dutch Finance Minister Jeroen Dijsselbloem said as he went into a meeting with his eurozone colleagues.

“They have done a lot of hard work … and are now coming out strongly,” Dijsselbloem said.

“There is still lot of work to be done but if they (stick with reforms), then they have great potential,” he added.

Portugal announced on Sunday it was going for a clean exit from its EU-IMF bailout, following in the footsteps of Ireland by foregoing a credit line as it prepares a full return to the financial markets.

“The government decided that we will exit our rescue programme without resorting to any precautionary programme,” Prime Minister Pedro Passos Coelho said.

The Portuguese finance minister is due to brief his counterparts later on Monday on Lisbon’s precise plans.

As the debt crisis deepened, it brought down Greece first in 2010, followed by Ireland and Portugal.

The European Union and the International Monetary Fund came to their rescue but in return for financial aid, the governments had to adopt sting austerity programmes, slashing spending and hiking taxes while at the same time liberalising their economies.

Greece had to be bailed out a second time in 2012 but it has recently made significant headline progress in restoring its public finances.

However its debt burden remains enormous and discussions about further reductions are continuing, with Dijsselbloem saying the Eurogroup would discuss the issue at the meeting.

However, any measures on the debt would have to wait until the second half of the year, he said, repeating the official position.