Portugal can do without last slice of bailout funds: finance minister
Portugal can do without the final slice of bailout funds, its finance minister said on Tuesday, as disbursement of the aid money was suspended after several austerity measures were rejected by the country's constitutional court.
“We can envisage this possibility, but we have not made a decision,” said Finance Minister Maria Luis Albuquerque on the sidelines of a meeting in Brussels.
In May, Portugal exited a three-year, 78 billion euros ($105 billion) bailout programme, but a final instalment of 2.6 billion euros in aid funds was still pending from its international creditors — the European Union and the International Monetary Fund.
Disbursement of the funds has been suspended following the court ruling because Portugal must “explain what it plans to do in 2014 and 2015 in order to benefit from this last tranche,” said Prime Minister Pedro Passos Coelho last week.
The court’s decision led to a 600 million euro shortfall in Portugal’s 2014 budget, and threatens the country’s plans to bring down its public deficit to 4 percent of output this year.
Passos Coelho said on Monday that he was awaiting the court’s decision on other austerity measures currently in place before putting to its creditors an alternative solution to bring down public spending.
The Portuguese economy remains fragile, contracting a 0.7 percent in the first quarter.
While public deficit has been halved to 4.9 percent since the bailout began, Portugal’s overall debt continues to balloon, reaching 129 percent of output.