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Portugal confident on targets, considers following Irish move on loans

ATHENS (Reuters) - Portugal is confident it will meet its fiscal targets for the year and may in future decide to follow Ireland's move to repay its International Monetary Fund loans early, Prime Minister Pedro Passos Coelho said on Tuesday.

Portugal, which completed its EU/IMF bailout programme in May but was forced to bail out its biggest listed bank last month, will stay on a course of reforms, Coelho said after a meeting with Greek Prime Minister Antonis Samaras in Athens.

Portugal expects its economy to grow around 1 percent this year in what would be its first full year of expansion after a three-year recession.

"We will accomplish the fiscal targets of this year," Coelho told reporters, speaking in English. "We will propose a budget for next year consistent with the objective to attain a 2.5 percent (of GDP) deficit."

Coelho and Samaras said both countries would pursue the difficult economic changes demanded by their foreign lenders in order to boost future growth.

"We must maintain our course for structural change. This is not an ending point with the conclusion of the programme," Coelho said.

"There is a lot to do in the coming years in structural change. Now it's easier to show to the markets and to the people that the sacrifices are making sense."

Coelho also said Portugal would support Dublin's proposal to request an early repayment of International Monetary Fund's loans since it was a "rational one" but has not decided if it would follow the same path.

"It's more favourable for Ireland to have financing in the markets to repay loans that have a higher price," Coelho said, noting that rates on Ireland's IMF loans were much higher than the current cost of raising funds on the debt market.

"This is a good prospect for us too. This divergence is not so big as in Ireland's case but I hope in the next couple of months Portugal can have better prospects at the 10-year maturity targets," Coelho said.

Coelho said it would make sense for Lisbon over the next years to similarly change some of its loans, though no decision had been taken yet.

Portugal last month said it would spend 4.9 billion euros (4 billion pounds) to rescue Banco Espirito Santo, the country's largest listed bank, pushing bond yields up.


(Reporting by Karolina Tagaris, writing by George Georgiopoulos; Editing by Ruth Pitchford)