Financial assistance to Portugal

In June 2014, Portugal exited its 3 year economic adjustment programme which included the implementation of an ambitious reform agenda and contributed to regaining economic growth and restoring investor confidence.

Portugal is now under post-programme surveillance (PPS) until at least 75% of the financial assistance received has been repaid. PPS is expected to last until 2035. The objective of PPS is to measure Portugal's capacity to repay its outstanding loans to the European financial stability mechanism (EFSM) and European financial stability facility (EFSF).

Under PPS, the European Commission and the European Central Bank (ECB), will launch regular review missions to Portugal to analyse economic, fiscal and financial developments, and report semi-annual assessments which may recommend further measures when necessary.

 The Portuguese government decided to end the programme without disbursement of the full amount of the assistance (in the end €24.3 billion of €26 billion was requested). This decision was publicly announced by the government on 12 June 2014. The concluding EFSM disbursement took place on 12 November 2014.

* The original maturity of 5 years of the EFSM loan of €4.75billion raised on 25 May 2011 and disbursed on 1 June 2011 to Portugal was extended in three tranches, in line with Council Implementing Decision 2013/323/EU.

Complementary disbursements were made by the EFSF and the IMF.

In 7 April 2011, Portugal requested financial assistance from the EU, euro area countries and the IMF. An economic adjustment programme was negotiated in May 2011 between the Portuguese authorities and officials from the European Commission, ECB and the IMF.

The agreement on the programme was formally adopted on 17 May 2011 at the Eurogroup/ECOFIN meeting in Brussels. The memorandum of understanding and the loan agreement were signed afterwards. It covered the period 2011 to mid-2014 and included a joint financing package of €78 billion, €26 billion of which was provided by the EU/EFSM, €26 billion by the EFSF and about €26 billion provided by the IMF.

The programme contained reforms to promote growth and jobs, fiscal measures to reduce the public debt and deficit, and measures to ensure the stability of the country’s financial sector.

Portugal Programme Assessment 15 May 2014

Objectives

The aid was provided on the basis of a three-year policy programme for the period 2011 to mid-2014.
The economic adjustment programme included:

• structural reforms to boost potential growth, create jobs, and improve competitiveness
• a fiscal consolidation strategy, supported by structural fiscal measures and better fiscal control over public-private-partnerships and state-owned enterprises, aimed at putting the gross public debt-to-GDP ratio on a firm downward path in the medium term and reducing the deficit below 3 % of GDP by 2014
• a financial sector strategy based on recapitalisation and deleveraging, with efforts to safeguard the financial sector against disorderly deleveraging through market based mechanisms supported by backstop facilities.

Financial package

The total of up to €78 billion of the financial package was financed as follows:

• EFSM (€24.3 billion disbursed by the end of 2014)
• EFSF (€26 billion disbursed by the end of 2014)
• IMF (€26.5 billion disbursed by the end of 2014)

Programme disbursements were made over three years, under EFSM with an average maximum maturity of 19.5 years. IMF disbursements were subject to the special drawing rights (SDR) rate developments.

Ex Post Evaluation of the Economic Adjustment Programme. Portugal, 2011-2014

Post-Programme Surveillance for Portugal. Autumn 2014 Report (occasional papers  208, December 2014)

The Economic Adjustment Programme for Portugal. 2011-2014 (occasional papers  202, October 2014)

The Economic Adjustment Programme for Portugal. Eleventh Review (occasional papers  191, April 2014)

The Economic Adjustment Programme for Portugal. Tenth Review (occasional papers  171, February 2014)

The Economic Adjustment Programme for Portugal. Eighth and Ninth Review  (occasional papers  164, November 2013)

The Economic Adjustment Programme for Portugal. Seventh Review – Winter 2012/2013 (occasional papers  153, June 2013)

The Economic Adjustment Programme for Portugal. Sixth Review – Autumn 2012 (occasional papers  124, December 2012)

The Economic Adjustment Programme for Portugal. Fifth review – summer 2012 (occasional papers  117, October 2012)

The Economic Adjustment Programme for Portugal. Fourth review – spring 2012 (occasional papers  111, July 2012)

The Economic Adjustment Programme for Portugal. Third review – Winter 2011/2012 (occasional papers  95, April 2012)

The Economic Adjustment Programme for Portugal. Second review - Autumn 2011 (occasional papers  89, December 2011)

The Economic Adjustment Programme for Portugal. First review - Summer 2011 (occasional papers  83, September 2011)

The Economic Adjustment for Portugal (occasional papers  79, June 2011)