LISBON (Reuters) - If Portugal passes its creditors’ current review of its bailout it could consider a precautionary loan program to replace the current one, Deputy Prime Minister Paulo Portas said on Monday.
Inspectors from the European Union and IMF were due to start their latest review of the country’s bailout on Monday. The program ends in the middle of next year, when Portugal is expected to return to full market financing if it can avoid a new bailout.
“If Portugal gets through the (combined) eighth and ninth review in a positive way, it will be significantly closer to the end of the lending program,” Portas told journalists.
He said Lisbon wants to “end the period of being a protectorate” and would seek to avoid following Greece into a second bailout, but could follow Ireland in negotiating a precautionary lending program.
“There’s no possible comparison between the two things,” he said. “Portugal would be able to finance itself autonomously as well as benefit from a precautionary program, which is not a second bailout.”
The review by the lenders is expected to be more difficult that the previous inspections after a major government reshuffle in July which left Portas, who has challenged austerity measures, in charge of the negotiations with the troika.
He reiterated that Lisbon would at least try to persuade the lenders to ease its 2014 deficit target to 4.5 percent of gross domestic product from the current 4 percent after the issue was first raised during the previous review. This year Lisbon has to cut the gap to 5.5 percent from 2012’s 6.4 percent.
“This difference (on the target) between the government and the troika is not from today, it was expressed in April. It would be strange if the government did not mention this in the name of national interests.”
The head of euro zone finance ministers, Jeroen Dijsselbloem, said on Friday Portugal should stick to deficit reduction goals already agreed. Portugal’s goals have already been eased twice since the bailout began.
Reporting by Axel Bugge and Andrei Khalip; Editing by Ruth Pitchford