Wall Street JournalPortugal's Final Bailout Payment Delayed
Payment Delay Puts Off Talks on Further Aid Until After European Elections
By Gabriele Steinhauser And Matina Stevis
Updated March 31, 2014 9:02 a.m. ET
ATHENS—Portugal's international creditors have delayed the final payment of the country's bailout until late June to avoid having to take a decision on further aid before European elections.
The move frees up European finance ministers, who meet in Athens on Tuesday and Wednesday, to focus on Greece's rescue program. They are expected to back paying out the remainder of Greece's euro-zone bailout, some €10.1 billion ($13.89 billion), over the next few months. Talks on a third round of rescue loans for the country have been put off until the summer.
Under its bailout program, Lisbon was supposed to receive its final installment on May 17, just over a week before citizens across the European Union's 28 member states elect a new parliament in a vote likely to deliver big gains for euroskeptic parties.
A spokeswoman for the International Monetary Fund, which chipped in a third of Portugal's €78 billion rescue, said the delay was necessary because the final review of how well Portugal has implemented the conditions attached to its rescue only happens at the end of April. The fund's board will formally discuss the delay at its next meeting in mid-April, she said.
An EU official said the European Commission, responsible for another third of the bailout, would also put off its final payment. The European Financial Stability Facility, the euro zone's interim rescue fund, will pay its last installment as scheduled in mid-May.
The delay comes after senior officials from euro-zone finance ministries last week for the first time debated Portugal's options for leaving its bailout program and left their meeting deeply divided. "The discussion was a bit messy," said a European official.
Portugal has seen interest rates on its bonds fall dramatically in recent months, and the commission expects its economy to grow 0.8% this year, its first annual growth spurt after three years of recession. Last week, the yield on its 10-year bonds dipped briefly below 4%—close to record lows the country saw in the booming mid-2000s and far from rates above 15% at the height of the euro crisis in early 2012.
But in contrast with Ireland, whose bailout ran out last year, Portugal's bonds are still classified as junk by the big three ratings agencies. Only Canada's DBRS sees Portugal's debt as "investment grade," with a triple-B rating and a negative outlook.
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