Portugal to repay IMF bailout loans early

Portugal will be able to repay IMF bailout loans early after regaining access to financial markets, Finance Minister Maria Luis Albuquerque announced Wednesday.

Six weeks after Ireland moved to get out from under its bailout debts, Lisbon will “begin the necessary steps” to accelerate the repayment of 26.9 billion euros ($31.2 billion) to the International Monetary Fund, she told a parliament committee.

The plan will need the approval of both the IMF and co-lender the European Union.

Portugal, which exited a three-year, 78-billion-euro bailout programme last May, has “very large liquidity reserves that will allow it to weather any volatile periods with serenity,” Albuquerque said.

She also pointed to a successful 30-year bond issue on January 13 that allowed Lisbon to raise 2.0 billion euros at 4.131 percent interest.

She said it was “further proof of the renewed credibility that Portugal has enjoyed in recent years.”

Portugal was already scheduled to begin repaying this year its loans to the IMF, reimbursing 550 million euros, and finishing by 2024.

Albuquerque did not commit to a figure on how much Portugal intends to repay early, saying it will be gradual and depend on market rates so Lisbon will lower its debt servicing costs with the transactions.

“Of course the government doesn’t plan on reimbursing in the next three months all of the 26 billion euros” to the IMF, she said.

“The reimbursement will be gradual” and “will be done as we are able to raise financing on the markets at lower rates.”

Ireland, rescued from the brink of bankruptcy in 2010, announced in early November that it will repay 9.0 billion euros of its IMF bailout loans early thanks to a solid recovery.

It was the first eurozone country to be able to exit an IMF-EU bailout, in December 2013.