EDITORIAL

Back from the brink

5/19/2014

Portugal, once one of Europe’s economic basket cases, has announced its departure from a three-year bailout program that appears to have restored it.

Amid the global recession, Portugal’s woes were severe. Its unemployment rate hit 17.7 percent. The country got $108 billion in loans from the European Central Bank, the European Commission, and the International Monetary Fund in 2011.

Portugal sought to regain the autonomy that comes from a healthy economy. A new center-right coalition government headed by Prime Minister Pedro Passos Coelho took drastic but necessary steps.

It cut spending, including public employee wages and pensions. It raised taxes. It cut Portugal’s budget deficit in half. Exports increased, as did the health of its private sector, and consumption rose.

To test the financial waters, Portugal floated a bond offering. The bonds sold at a low interest rate. Economic growth for the next two years is now forecast to top 1 percent each year.

In leaving the bailout program, Portugal did not ask for a precautionary line of credit to serve as a safety net. That underlined its desire to be responsible for its own finances once again.