BERLIN, March 18 Germany will support Portugal
in its forthcoming decision on how to exit its bailout
programme, Chancellor Angela Merkel said on Tuesday, adding that
she expected a decision from Lisbon soon partly because
confidence in the euro zone was growing.
"It is a decision for the Portuguese government," Merkel
said at a news conference in Berlin with Prime Minister Pedro
Passos Coelho, adding she was confident Portugal's opposition
was also committed to European Union fiscal rules.
"I have no doubt, and the prime minister also told me, that
the opposition has acknowledged Europe's fiscal framework ...
despite differences on some individual questions," she said.
Many economists think Portugal should seek a precautionary
loan accord to ensure that its planned exit from the bailout
from the European Union and IMF is smooth.
At the same time, Portuguese bond yields have fallen sharply
and are currently trading at the levels of 2010 - a year before
it had to seek international assistance.
After an exit, its finances will still be bound by deficit
reduction targets set by the 2012 EU fiscal pact. The Socialist
opposition has supported the budget pact but says consolidation
should be based on growth, not government-backed spending cuts.
The government has said it will only make a decision on
whether to seek a precautionary loan about a month before it
exits the bailout in May.
"I completely understand it when the Portuguese prime
minister says he will take the decision when it needs to be
taken and Germany will support any decision. We have stood by
Portugal and we will continue to do so," said Merkel.
Passos Coelho said Portugal had not yet decided how to exit
"I took the opportunity to tell Chancellor Merkel that the
Portuguese government has not yet taken a decision about when we
will exit the programme," he said, adding that the main point
was that Portugal was discussing "how to exit rather than
whether we need another programme".
Merkel reiterated that Portugal was on the right path and
that economic growth rates were good, which would help ease high
unemployment rates, especially among young people.
Merkel also said it would be important if Europe agrees to a
banking union in the next few days.