The Portuguese Government repaid this Monday, December 22, in advance 2.5 billion euros of macro-financial assistance from the European Union (EU), leaving 19.8 billion euros unpaid, announced the European Commission.
“Today, the Portuguese public debt management service repaid 2.5 billion euros of its debt to the European Financial Stabilization Mechanism [MEEF] – the EU instrument that provides financial assistance to any EU country facing serious financial difficulties, managed by the European Commission”, said the community executive in a statement.
This early repayment concerns the financial assistance program for Portugal in 2011-2014, under which the country received 24.3 billion euros in loans from the EFSM, as well as financing from the European Financial Stability Fund and the International Monetary Fund.
Since Portugal had already repaid another two billion euros in 2019, 19.8 billion euros of MEEF loans now remain unpaid.
“The reimbursement was made in cash and fully covers the corresponding responsibilities of the Commission, guaranteeing compliance with all relevant financial obligations”, said the community executive.
Last Friday, the European Financial Stability Fund approved a derogation that now allowed Portugal to repay in advance 2.5 billion euros of loans granted to the country during financial assistance, following a request from the Government.
According to the now European Stability Mechanism (ESM), which replaced the EFSF, which was provisionally created in 2010 for macro-financial assistance to eurozone countries such as Portugal, the derogation “was granted following a formal request from the Portuguese Government, which intends to repay 2.5 billion euros in advance of its EFSF loan by the end of 2025”.
The EFSF loan agreements signed with Portugal specify that upon early repayment of the EFFS loan, a proportionate amount of financial assistance granted under the EFSF facilities becomes immediately due and payable, but the mechanism may waive this obligation so that payments are made in accordance with the current repayment schedule.
Quoted in the statement, the director of the now MEE and executive president of FEEF, Pierre Gramegna, pointed out that “Portugal’s request to make early repayment of its MEEF loan highlights the country’s strong economic and budgetary performance in recent years”.
The financial assistance package granted to Portugal by the FEEF, the MEEF and the International Monetary Fund (IMF) between 2011 and 2014 amounted to 78 billion euros.
Each official creditor contributed one third of the total amount.
Portugal completed the early repayment of its loans to the IMF in December 2018 and, in September 2019, the country made an early repayment of two billion euros to the EFSF.
The EFSM is a mechanism created by the European Commission in 2010 to provide financial assistance to EU countries facing or threatened by serious financial difficulties.
It was used to provide financial assistance to Ireland and Portugal between 2011 and 2014 and to provide a short-term bridge loan to Greece in July 2015.
Currently, euro area countries in need of financial assistance must turn to the ESM, the single currency’s current bailout fund.