Portugal is not likely to need another bailout, an International Monetary Fund (IMF) representative said in Lisbon on Friday, according to dpa. Poul Thomsen said he was "fairly confident" this would not be needed, as the IMF, the European Union and the European Central Bank issued an encouraging assessment of Portugal's performance in applying its current bailout package. The general assessment was "very positive," European Commission representative Juergen Kroeger said. Portugal was granted a bailout worth 78 billion euros (109 billion dollars) in May, becoming the third eurozone country to be rescued after Greece and Ireland. The positive assessment by the EU-IMF-ECB "troika," whose representatives visited Lisbon for nearly two weeks, opened the way for Portugal to receive the second loan tranche, worth 3.7 billion euros, by September. Lisbon has already received 20 billion euros. Under the terms of the bailout deal, Portugal has to cut its budget deficit to 5.9 percent of gross domestic product (GDP) this year, down from 9.1 per cent in 2010. Prime Minister Pedro Passos Coelho said earlier his conservative government had inherited a "budget slippage" of 2 billion euros from the previous Socialist government. In fact, the troika had discovered a "foreseeable" budget gap worth 1.1 per cent of gross domestic product (GDP), Finance Minister Vitor Gaspar said. However, the troika said measures were underway to address slippages in expenditure controls, keeping Portugal on track for a deficit of 5.9 per cent of GDP. Portuguese exports had been relatively strong, consumer confidence indicators were steady, and unemployment - amounting to about 11 per cent - was broadly stable, the troika said in a statement. Portugal had also made progress in strengthening bank capital levels, the banking regulatory framework, the abolition of special rights of the state in private companies, and in labour market reforms, according to the EU, IMF and ECB. However, "most of the difficult challenges still lie ahead," the troika warned. Thomsen stressed the need for the Portuguese economy to become more open and competitive. Gaspar announced new austerity measures, including raising value added tax (VAT) on electricity and gas in the last quarter of this year, instead of in 2012 as initially planned. The bailout programme includes spending cuts, tax hikes, privatizations and reforms to make the labour market more flexible. The review carried out by the troika was overshadowed by the recent deepening of the European debt crisis, and concern over the US economy. Portugal is in a recession, with the economy expected to contract 2.2 per cent this year.
