(MENAFN- Saudi Press Agency) Portugal has done well in meeting its bailout
programme, but contagion from the eurozone could still reverse the
gains made to date, dpa quoted the International Monetary Fund as warning Tuesday.
The IMF's more-detailed assessment on Portugal - coming a day
after its global economic growth forecast - came after the agency
approved a 1.48-billion-euro (1.8-billion-dollar) loan disbursement
to the cash-strapped country as part of a bailout approved last year.
The loan is the latest instalment of the IMF's share of the
three-year, 78-billion-euro bailout.
Lisbon has admitted to having difficulties in meeting its budget
deficit targets, and there has been some concern that Portugal could
need a second financial rescue.
There were signs that the adjustment was moving ahead, the IMF
said. The fiscal and external current account deficits have narrowed
'significantly,' and the recession seems to be abating, according to
the report.
However, growth was being impeded by high private and public
sector indebtedness, the IMF said.
The broader euro area crisis also creates 'persistent risks of
contagion,' the report warned. 'Even with a strong programme of
implementation, adverse external shocks could reverse the gains made
to date.'
Other risks included a deeper or longer recession than had been
expected, and the migration of private sector losses to the sovereign
balance sheet.
Portugal's high unemployment - currently at about 15 per cent -
required a 'policy response,' the IMF advised. It also urged Lisbon
to strengthen the capital buffers of the largest banks, and called
for 'comprehensive policy action on the European level.'
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