A graph showing Portugal’s government borrowing costs over the past decade provides a telling snapshot of the country’s recent history. From about 4% between 2006 and 2010, the yield on benchmark 10-year debt soared to a record high of more than 15% in early 2012, months after Lisbon was forced to negotiate a €78bn bailout package with the EU and the International Monetary Fund (IMF).
By March last year, the yield had fallen to an all-time low of just over 1.5%, a level seen as reflecting the success of the gruelling three-year adjust programme that Portugal had exited less than a year earlier. By February this year, however, the rate had climbed back above 4.5%, as the new Socialist Party government argued in Brussels over a draft budget that the European Commission challenged as putting the country’s deficit-reduction commitments at risk. In February, Lisbon paid its highest rate since 2014 in an issue of 10-year government bonds.
