Portugal was the third nation to need an IMF/Eurozone bailout loan during the worst of the Global Financial Crisis after Greece and Ireland. Portugal found itself unable to raise funds via the international money market at a reasonable price; the interest on its 10-year bonds rose from a pre-crisis level of about 4% to a peak of 14% (Jan 08 and Jan 12). The led it to accept a loan of €78 billion in 2011 in order to finance the government’s needs. The loan, which was interest bearing, came with strings attached to reform the Portuguese economy and restore the country to a sustainable economic path.
This week, the European Commission has announced that Portugal has achieved the feat of restoring its budget deficit to a value below the EC’s target figure that states were to meet (and maintain) before being able to join the Euro i.e. ≤3% of GDP. Portugal’s current deficit is 2% of the nation’s GDP. This means that Portugal is no longer subject to the EC’s excessive debt procedure.
Portugal endured austerity measures under its centre-right government following the bailout between 2011 and 2015 when the government fell. The incoming Socialist coalition has since been able to ease many of the unpopular austerity measures introduced by its predecessor (and required as a condition of the bailout).
In response to the EC’s declaration, a statement from Portugal’s finance ministry noted that: "It expresses the evaluation of the Commission that Portugal's excessive budget deficit has been corrected in a sustainable and lasting way. Confidence in the Portuguese economy is beginning to be reflected by international institutions."
France and Spain, neither of which was a recipient of a sovereign bailout (although Spain’s banks did receive such help) are running deficits which are currently in excess of the EU’s rules of 3.4 and 4.5% respectively.