Unlike Greece, Portugal Pays Back IMF Loans

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In contrast to Greece’s cavalier attitude toward paying back IMF loans, Portugal is paying back its due share of bailout funds early thanks in part to record-low yields on government bonds and a recovering economy.

After the EU granted approval to Portugal to make early payments, Portugal paid 6.6 million euros ahead of time to the IMF in March. On June 8, Portugal’s finance ministry said that it intends to pay another 2 billion euros to the IMF this month.

But Portugal’s payments are not accompanied by favorable feelings for the IMF. In the run up to elections some four months away, both the governing and opposition political parties have voiced displeasure with the IMF.

Portugal’s Socialist Party, which enjoys a slight lead in national polls, has regarded the IMF- and EU-designed bailout program as a mistake.

On the part of the governing Social Democratic Party, in late May, Finance Minister Luis Alburquerque said an IMF report critical of Portugal’s economic reforms had “a very distorted view related to a series of issues.” He also stated that, after going through with the financial bailout and accompanying austerity policies, Portugal had “gained the right” to disagree with the IMF. Portugal’s economy minister said that reading IMF reports doesn’t fall under his priorities.

Meanwhile, in Greece, hostility toward the IMF went far beyond harsh words and veiled criticism. Amid negotiations with the EU, Greece’s government informed the IMF that it would be stalling a US$335 million payment due June 5 until the end of the month. The move surprised many but was completely within IMF rules, using a seldom-used option to defer all debts and bundle them into one monthly payment.

Both Greece and Portugal received billions of euros in loans from the IMF, the EU, and the European Central Bank to ward off bankruptcy during the 2010 and 2011 European debt crisis.

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