4th Oct 2013 11:04
LISBON (Alliance News) - Portugal's borrowing costs fell on Friday after the country's international lenders said it was on track in applying austerity policies under its bailout programme.
The yield for benchmark 10-year bonds dropped to 6.49 per cent, from 6.6 per cent on Thursday. They had previously been above 7 per cent for several weeks as investors appeared to be losing trust in Portugal's solvency.
Yields for shorter-term bonds also improved on Friday.
Prime Minister Pedro Passos Coelho's government is applying budget cuts and liberal economic reforms agreed with the European Union and the International Monetary Fund, which granted Lisbon a financial rescue worth 78 billion euros (106 billion dollars) in 2011.
Portugal has already received more than 67 billion euros from the loan package. The bailout programme is due to be wrapped up mid-2014.
The European Commission, European Central Bank and IMF - known as the troika - issued an assessment of Portugal's bailout performance on Thursday, saying the programme remained "broadly on track" and that "there are early signs of a recovery in economic activity."
It said the Portuguese government now expected gross domestic product to contract by only 1.8 per cent this year, down from an earlier estimate of 2.3 per cent. In 2014, the economy is expected to grow by 0.8 per cent, up from a previous forecast of 0.6 per cent.
Portugal now meets "practically all the conditions to successfully complete the (bailout) programme," Passos Coelho told parliament on Friday.
Copyright dpa