Portugal exits from bailout without precautionary credit line

Portuguese Prime Minister Pedro Passos Coelho has announced that the debt-laden country will end a bailout program on May 17, without applying for a precautionary credit line. In a televised speech on Sunday, Passos Coelho said that his government has made the decision after carefully weighing the pros and cons and that the decision is a right choice at an appropriate time to more effectively defend the interests of Portugal and the Portuguese. "It's the right choice," Passos Coelho said. "It defends most efficiently Portugal's interests and those of the Portuguese. We were able to choose this option because the program is on the right track for its term and put Portugal on the way to financial stability and competitiveness," he said. But he warned that there was a long road ahead. The prime minister made the announcement after a meeting with cabinet ministers to discuss how Portugal will exit its 78-billion-euro (108-billion-U.S. dollar) bailout program. Portugal has been under considerable pressure by the troika of international lenders -- the European Commission, the International Monetary Fund (IMF) and the European Central Bank (ECB) -- to opt for a precautionary credit line. The credit line would help ease its return to the bond markets and enable it to access outright monetary transactions from the ECB. It would also reassure investors that the country would not default. After Lisbon's announcement, however, the European Commission said it took note of the decision and would "support the Portuguese authorities and people in this sovereign choice." IMF head Christine Lagarde said in a statement that although challenges remain, Portugal is now in a strong position to complete the consolidation of public finances and further deepen structural reforms, which will be essential to achieve sustainable growth and job creation. Portugal saw the strongest growth in the European Union and has been dubbed the "good pupil" of the troika. The economy has shown signs of improvement, which is expected to grow 1.2 percent this year. Bond yields have fallen, meaning prospects of Portugal financing itself in the markets are improving. However, austerity has undermined Portugal's economy, with its budget deficit exceeding 4 percent of GDP. Unemployment level is still high, with a third of young people without jobs. Rating agencies still classify Portugal's sovereign debt as below investment grade. Lisbon will tell eurozone finance ministers about its decision on Monday.