Portugal received a $2.6 billion facility disbursement last week after the International Monetary Fund’s executive board completed the eighth and ninth reviews of the country’s performance under an economic arrangement supported by a $36.2 billion extended fund facility.
Last week’s disbursement brings the total amount of disbursements under the arrangement to $32.6 billion.
“Portugal’s short-term outlook has improved and unemployment has started to decline,” Nemat Shafik, the deputy managing director and acting chairman of the IMF executive board, said. “Considerable progress has been made in advancing fiscal and external adjustment and structural reforms. Decisive steps were taken to keep the program on track following recent setbacks and legal challenges. Nonetheless, there remain implementation risks and uncertainty surrounding macroeconomic prospects and market financing. Continued strong commitment to the program and political cohesion are therefore critical to strengthen the recovery and regain full market access.”
The EFF arrangement, which was approved in 2011, is part of a financing package with the European Union that amounts to $104 billion and is designed to provide the country with relief from borrowing while it attempts to put its economy back on track.
“Forceful implementation of the ambitious reform agenda is critical to boost competitiveness, jobs, and long-term growth,” Shafik said. “This includes further advances to address the remaining nominal rigidities and supply-side bottlenecks. In addition to strong program implementation, Portugal’s success continues to depend on external support and effective crisis management policies at the euro area level, including support by the Eurosystem to help address financial segmentation and restore an appropriate monetary policy transmission.”