Portugal vows to stick to austerity after bailout ends

Portugal will stick to its austerity course after its financial bailout programme of 78 billion euros ($106 billion) ends in May, Portuguese Prime Minister Pedro Passos Coelho said Friday.

The country has been living under the strict rules of the rescue programme agreed in May 2011 with the so-called troika of the EU, the International Monetary Fund and the European Central Bank.

In exchange for rescue loans, Portugal agreed to push through austerity measures and deep reforms that have sparked recession, pushed up unemployment — and encountered increasing resistance from unions and voters.

Passos Coelho said Portugal would “enter into a new phase” after the bailout package expires on May 17.

“This new phase will not signify a return to fiscal indiscipline, to a loss of competitiveness, to the accumulation of debt and of economic stagnation,” he said during a speech at conference in Madrid on the future of the European Union.

“Portugal has experienced with great suffering where that path leads us. Believe me the Portuguese know very well the price we pay for irresponsibility and shortsightedness in political choices. We say no to irresponsibility.”

Portugal’s international creditors on Wednesday called on all parties and citizens in the country to back austerity measures for “a few more years” after its financial bailout package ends in May.

“The troika have let it be known that it will be good to have a bigger consensus, not only with the PS (opposition Socialist Party) but also with the whole of Portuguese society,” said Miguel Frasquilho of the ruling centre-right PSD, following a meeting with representatives from the creditor institutions.

Troika representatives arrived Wednesday in Lisbon to look at the country’s accounts before it leaves the programme.

The Portuguese economy emerged from recession last year and unemployment has begun to fall from record levels as the government has worked to squeeze down the country’s public deficit.

Despite Portugal’s efforts the main ratings agencies still classify the country’s bonds as junk.