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Eurogroup warns Portugal on bailout exit

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Eurogroup warns Portugal on bailout exit

Jeroen Dijsselbloem - Photo EP

(LISBON) - There will be no turning back for Portugal when it makes a clean exit from its bailout this month without a credit safety net, the president of the Eurogroup warned Thursday.

"A precautionary credit line by definition is asked for in advance," Dutch Finance Minister Jeroen Dijsselbloem said in an interview with Portuguese daily Expresso.

But if the request is made later "when conditions turn bad, it is no longer a precautionary credit line" and Portugal would then require a new rescue programme, he said.

Portugal announced on Sunday it was going for a clean exit from its EU-IMF bailout, following in the footsteps of Ireland by foregoing a credit line as it prepares a full return to the financial markets.

Portugal's Prime Minister Pedro Passos Coelho on Thursday said Lisbon would present its plans for the country's financial future on May 17, the day it exits its three-year bailout.

"As Ireland did, we will make commitments for the future not to waste what the Portuguese have taken so much time to build," he told a cabinet meeting.

Unlike Ireland, however, Portugal has already managed to return to debt markets before the end of its 78-billion-euro ($108 billion) aid programme.

Dijsselbloem said Portugal's economy is in a better state than Ireland's was when it exited its bailout in December 2013 and it was unlikely it would need any international help.

"I'm sure that financial investors continue to be interested in Portuguese paper," he said.

Portugal made the decision while still enacting the latest round of severe measures to keep its public finances within targets laid down by the International Monetary Fund, European Union and European Central Bank.

Rafts of reforms tied to rescue loans pushed the country into recession and the people into severe hardship, with cuts in pay, pensions and public services.

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