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Portugal beating targets for debt: Gaspar

Published on 19/03/2012

Portuguese Finance Minister Vitor Gaspar said Monday that the country is cutting its debt levels faster than earlier projected under its bailout plan.

Gaspar said that the details of the country’s third review under the 78 billion euro ($103 billion) EU-International Monetary Fund rescue last year will show improvement in several key metrics, including the ratio of public debt to gross domestic product.

Under the previous review the country’s debt ratio — a measure of whether its debt burden is sustainable — was expected to peak at 188 percent in 2013 and then fall about two percentage points a year through 2016, the end of the bailout program.

But the new forecast “is actually more favorable” than that from December, Gaspar said at the Peterson Institute for International Economics, a think tank in Washington.

“Indeed, according to the latest numbers, the debt sustainability analysis for Portugal is more favorable” than December’s figure.

He declined to give any figures; the data is usually released by the IMF, which monitors performance under its loan program.

Gaspar also said rising Portuguese exports, including areas like footwear and paper, were helping the country close its current account deficit more quickly.

“The current account was corrected much faster than in the program. As a matter of fact, the current account deficit at the end of 2011 is already lower than what the program foresaw for 2012,” he said.

“The main driver behind this development has been the dynamism of exports, which suggests that the economy is able to adjust faster than experts thought” when the program was signed.

Gaspar, in Washington to meet key US and international finance officials, would not say whether Portugal was seeking easier terms under its bailout program, after Greece earned a huge private-sector debt writeoff and lower borrowing rates in its second massive rescue just agreed earlier this month.

But he suggested that Portugal would not be seeking a writeoff of its debt held by private investors in the way Greece did.

“From the viewpoint of my country,” he said, the Greek debt swap and writeoff “has always been regarded by the eurogroup as a unique initiative.”

“So it is something which is not to be repeated,” he said.