The European Commission, on behalf of the EU, today disbursed its final loan of €400 million to Portugal under the European Financial Stabilisation Mechanism (EFSM) and as part of the financial assistance programme for Portugal which concluded earlier this year.
Commissioner for Economic and Financial Affairs, Taxation and Customs Pierre Moscovici said: “European solidarity has helped Portugal get back on its feet after the country’s deep economic crisis. The Commission continues to stand by the Portuguese people in these still difficult times and will support the country’s ongoing efforts to build a more solid basis for economic growth and job creation for its citizens.”
The funding for today’s disbursement was raised on the financial markets on the 5 November by the European Commission, issuing a €660 million benchmark bond with 15-years maturity, yielding with around 1.5%. These funds were also used to finance a Macro-Financial Assistance (MFA) loan to Ukraine.
Financial assistance for Portugal
Since 2011, Portugal (as well as Ireland) has received loans from a financial assistance programme, jointly provided by the EU European Financial Stability Mechanism (EFSM), the European Financial Stability Facility (EFSF) and the International Monetary Fund (IMF). The agreed assistance for Portugal totalled to up to €78 billion with an EFSM share of €26 billion, where €24.3 billion was ultimately requested. In agreement with the Portuguese authorities, the final EFSM disbursement to Portugal was funded on the markets last week in order to achieve a sizeable funding volume and most favourable borrowing conditions.
The complementary disbursements made by the EFSF and the IMF were also recently concluded.
In June 2014, Portugal exited its three-year Economic Adjustment Programme which included the implementation of an ambitious reform agenda and contributed to regaining economic growth and restoring investor confidence for the sovereign.
Portugal is now under post-Programme surveillance (PPS) until at least 75% of the financial assistance received has been repaid. The objective of PPS is to ensure a continued sound economic reform path and to measure Portugal’s capacity to repay its outstanding loans to the EFSM and EFSF.
Under PPS, the European Commission, in liaison with the European Central Bank, launch regular review missions to the Member State concerned to analyse economic, fiscal and financial developments; and report semi-annual assessments.
The EU as a borrower
Since January 2011, the EU has raised in total €48.86 billion from the bond market, used mainly for the EFSM (€46.8 billion) and the remainder for Balance of Payments and the Macro-Financial Assistance loans.
Given the already concluded EFSM funding for Ireland and now Portugal, no further EFSM funding for disbursements is planned. However, the agreed prolonging of maturities is expected to keep the EU active as a benchmark issuer under the EFSM programme until 2026.
The EU is rated AAA/Aaa/AA+/AAA by the major rating agencies (Fitch, Moody’s, Standard & Poor’s, DBRS), all rating outlooks are stable.
The EU funds its loans by issuing debt instruments in the capital markets. Funds raised are lent to beneficiary countries under almost exactly the same terms, i.e. with the same coupon, maturity and for the same amount.
Issuances by the EU are executed by the European Commission’s financial operations department located in Luxembourg.
Information on EFSM and financial assistance to Portugal:
EU investor relations website: