Lenders say Portugal bailout on track, headwinds stronger

LISBON Mon Nov 19, 2012 8:10pm GMT

LISBON (Reuters) - Portugal's EU and IMF lenders gave Portugal thumbs up for the next tranche of their bailout funds on Monday, but warned of significant risks at home and abroad to the recession-hit, debt-laden country.

"The program is broadly on track, despite stronger headwinds," the European Commission, European Central Bank and International Monetary Fund said in a joint statement.

"Rising unemployment, lower incomes, and uncertainty are weighing on confidence, while the recession in the euro area is beginning to bear on export dynamics," the statement said. "While downside risks to growth are significant, the program's macroeconomic framework remains appropriate."

EU Economic and Monetary Affairs Commissioner Olli Rehn also said that "confidence in Portugal's prospects continues to grow, both among its institutional partners and market participants. This bodes well for Portugal's full return to market financing."

(Reporting By Andrei Khalip, editing by Axel Bugge)