Portugal opposition says country won't meet bailout goal

Reuters News
Posted: Sep 05, 2012 1:11 PM

LISBON (Reuters) - Portugal will miss its budget deficit goal under its 78-billion-euro bailout and needs more time to meet the target, the head of the country's opposition center-left Socialist Party said on Wednesday.

"The recipe that the government is applying, of austerity at any cost is not resolving the country's problems, but worsening them," Antonio Jose Seguro told journalists after meeting with inspectors from the European Commission and IMF who are in Lisbon reviewing the economy.

Seguro said he told members of the so-called "troika" that the country's "central objective of the adjustment, the reduction of the budget deficit to 4.5 percent (of gross domestic product) won't be met."

His comments tallied with economists who widely expect the country to miss its budget deficit goal this year as the worst recession since the 1970s deepens. That would mark a setback for the center-right government that has single-mindedly focused on meeting the bailout goals with sweeping austerity policies.

Portugal has so-far won praise for broad political consensus behind its bailout, in sharp contrast to Greece. Suggestions that this may fray as a deep recession worsens could make it harder for the Portuguese to stomach more austerity.

Seguro said he considers political consensus important at a time of "national emergency" but he said "consensus had been weakened in the past year because the government took initiatives without consulting the Socialists."

He said he had proposed measures to free up 3 billion euros in funding for small and medium-sized companies, which have seen their credit dry up in the crisis.

"I told the troika that the recipe that the government is applying in Portugal is making the problems of the Portuguese worse," Seguro said, adding the officials "had much less to say to counter the Socialists' proposals."

Portugal's economic challenges could rise if the bailout fails to deliver growth -- so far this year the recession is deeper and unemployment is higher than the government expected.

(Reporting By Daniel Alvarenga and Axel Bugge; editing by Ron Askew)