BERLIN May 17 German Finance Minister Wolfgang
Schaeuble congratulated Portugal for exiting its bailout
programme in a letter made available to Reuters on Saturday,
acknowledging reforms had not been easy but would eventually pay
The 78-billion-euro ($107 billion) international bailout
imposed years of austerity on Portugal's citizens and around 15
percent of the workforce are unemployed as the country takes
back control of its finances from the European Commission,
European Central Bank and International Monetary Fund.
Portugal is the second euro zone state after Ireland to exit
a full bailout, having stuck to the European Union's recipe of
belt-tightening to beat the euro zone crisis.
Spain exited an aid programme for its banking sector in
January without drawing more European funds.
"Steadfast programme implementation has allowed Portugal to
bring its economy back on track, put public finances on a path
to sustainability, and reduce imbalances that had been building
up before the crisis," Schaeuble wrote in the letter addressed
to Portuguese Finance Minister Maria Luis Albuquerque.
The exit showed "the European crisis resolution strategy is
working," he added.
The rescue programme assembled in 2011 for the nearly
bankrupt country concluded with Portugal's budget in much better
shape and borrowing costs at eight-year lows.
But a shock 0.7 percent drop in its GDP in the first quarter
pointed to the risks inherent in an economic recovery plan
which, by focusing on fuelling export growth by cutting labour
costs, has become dependent on volatile foreign demand.
"Of course Portugal still faces important challenges,
including with regard to sustaining fiscal consolidation over
the medium term and continuing growth-enhancing structural
reforms," he wrote.
"I am reassured by the government's reaffirmed commitment to
tackle remaining vulnerabilities with unchanged determination."
Now that its lenders have stopped reviewing the economy,
Portugal can change policies more freely, even if still needs to
gradually reduce the budget deficit under EU rules.
The government has already said it will partly reverse
salary cuts in the public sector in the next few years and it is
considering cutting taxes next year.
($1 = 0.7297 Euros)
(Reporting by Thorsten Severin; Writing by Alexandra Hudson;
Editing by Sophie Hares)