Portugal pays off IMF debt but national debt at record high

Portugal has cleared the rest of its debt owed to the IMF following the country’s technical bankruptcy in 2011 which resulted in the IMF/EU/ECB troika running the country’s finances for six years.

On Monday it was announced by the Minister of Finance, Mário Centeno, that the country had paid €4.7Bn of its remaining debt to the IMF and saved over €100 million in paying the debt early. Overall it has managed to save €1.2Bn of interest by paying either early or on time.

Portugal was bailed out to the tune of €76.5Bn in 2011, the lion’s share owed to European creditors, but the IMF demanded a higher interest rate of 4.3% for the €28Bn it had loaned to the country.

In order to limit its financial burden in interest payments associated to the loan, Portugal began to pay the IMF ahead of time from 2015 under the then centre-right government of Pedro Passos Coelho, a policy which was continued by his successor, the current prime minister, António Costa.

António Costa announced that the remaining €4.7Bn will be cleared by the end of year during his speech signing off the State Budget for 2019 and on Monday evening at the Finance Ministry Mário Centeno announced that the debt was paid.

The original payment installment plan anticipated the debt was to be cleared by 2022/3 but with the debt cleared Portugal has saved a total of €1.2Bn in interest payments.

However, the leader of the PSD opposition, Rui Rio said that while paid, Portugal accumulated public debt had actually risen to a new record under the current government to €251.1Bn.