The International Monetary Fund said Portugal was on track with the conditions of its bailout programme and gave the indebted euro zone country another 1.9 billion euros ($2.5 billion). The board also waived certain conditions Portugal was supposed to meet by the end of September because the IMF's board did not have access to all the needed data when they met, the IMF said in a statement on Friday without giving details.
Portugal's prime minister said this week the country was determined to conclude its 78 billion euro bailout as scheduled in June 2014 and return to financing itself in debt markets, instead of relying on international lenders, the IMF and European Union. Portugal exited its worst recession since the 1970s in the second quarter of this year, when the economy expanded 1.1 percent quarter on quarter, and the government expects continued growth for the rest of the year.
The IMF said there are still risks Portugal may not be able to finance itself in markets. It called on the government to continue its austerity policies. "Continued strong commitment to the program and political cohesion are therefore critical to strengthen the recovery and regain full market access," Nemat Shafik, a deputy managing director at the IMF, said in a statement. However, the IMF said the country's success in pulling itself out of its crisis also depends on the commitment of the euro zone currency bloc as a whole.
The IMF also called on Portugal to intensify its efforts to restructure banks to help them deal with a pile of corporate debt. Analysts are questioning whether Lisbon can stabilise its debts without further help. Portuguese central bank chief Carlos Costa said last week that the fact Portuguese banks still faced unsustainably high borrowing costs on mainstream markets showed the country needed to do more.
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