LISBON, Portugal (AP) — Portugal's finance minister says the country's bailout lenders have agreed to ease its debt-reduction targets amid deteriorating economic prospects.

Portugal needed a €78 billion ($101 billion) rescue in May 2011 when investors, worried by its high debts and meager growth, stopped lending it money.

It has struggled to recover its financial health due to austerity measures and a wider economic downturn in Europe.

The Portuguese economy contracted 3.2 percent last year and is forecast to shrink 2.3 percent in 2013 for a third straight year of recession. The unemployment rate, currently at 17.2 percent, is forecast to reach 18.5 percent in 2014.

Finance Minister Vitor Gaspar said Friday the bailout lenders are giving Portugal an extra year, until 2015, to get the budget deficit below 3 percent.