Portugal exits bailout but presses on with austerity

Portugal on Saturday exited its 78-billion-euro international bailout programme, but the government warned that it was no time for euphoria. Budgetary discipline and austerity policies remain the mantra for the country which has seen severe pay, pension and job cuts in the three years under IMF and EU supervision. Government spokesman Luis Marques Guedes said: "The time for euphoria has yet to come. We must maintain rigour to avoid falling back into the errors of the past." Hit full force three years ago by the debt crisis that had already forced Greece and then Ireland to seek international aid, Portugal suddenly found itself unable to afford the soaring borrowing costs it was being charged by financial markets. On the brink of financial collapse, the eurozone country grabbed a financial lifeline in the form of a 78-billion-euro ($107 billion) loan. The string attached was its agreement to enact unprecedented austerity measures, including slashing public sector salaries and pensions while raising taxes by 30 percent. "Portugal has managed to overcome one of the worst crises of its recent history, but there remains much to be done. Budgetary discipline will be one of our daily responsibilities," said Prime Minister Pedro Passos Coelho. The economy remains fragile, contracting a 0.7 percent in the first quarter, sending alarm bells ringing. While public deficit has been halved to 4.9 percent since the bailout began, Portugal's overall debt continues to balloon, reaching 129 percent of output from 94 percent. Sending a signal of its determination to press on with austerity, the Portuguese government issued a document called "the road to growth" on Saturday which outlines further plans to cut public spending. Coelho's government won praise from its creditors for having doggedly followed the austerity receipt, facing down massive protests. It has also opted to exit the bailout programme without requesting the financial safety net of a precautionary line of credit, like Ireland -- the first eurozone country to exit its rescue programme.