Portugal repays half of IMF loan

Portugal has made a new early repayment of 1.7 billion euros to the International Monetary Fund, meaning it has reimbursed half of the bailout loans provided by the IMF during the 2011 debt crisis, the Finance Ministry said on Monday.

“The reimbursement has been concluded about six months earlier than planned, reflecting the robust economic and financial conditions in Portugal,” the ministry said in a statement.

Last week, the government said it cut the budget deficit in 2016 to 2.1 percent of GDP or less, the lowest level in the country’s democratic history and the first time it came below the European Union’s 3 percent threshold.

Portugal started early reimbursements to the IMF in 2015 to save on interest payments after exiting the bailout programme.

The IMF provided about a third of the joint EU/IMF 78 billion euro bailout. The IMF’s portion carries higher interest payments than both the EU’s part and current market rates, however, and the country has been repaying the costlier debt early by issuing bonds.

It has preferred to keep repaying the loans even as its benchmark 10-year yields have risen to around 4 percent – near the levels of 2014, the last year under the bailout.