Portugal PM to detail more austerity on Friday: media

Reuters News
Posted: Sep 07, 2012 10:07 AM
Portugal PM to detail more austerity on Friday: media

LISBON (Reuters) - Portugal's Prime Minister Pedro Passos Coelho will outline possible new austerity measures late on Friday, media reported, as the country struggles to meet tough fiscal goals set under its international bailout.

Inspectors from the European Commission, European Central Bank and IMF are in Portugal finalizing the fifth quarterly review of the country's performance under the 78-billion-euro rescue package.

State broadcaster RTP and business daily Jornal de Negocios reported the premier would detail the fresh measures in a televised statement, but gave no further details.

Nobody from the government was immediately available to comment.

Economists have said Portugal is unlikely to meet its budget deficit goals this year and next because its deepest recession since the 1970s has undermined tax revenues. The shortfall would either have to be countered by delaying budget goals or with more austerity, economists say.

"We all undoubtedly want to overcome our difficulties without overburdening the Portuguese with taxes, but none of us - absolutely none - is in conditions to say that we won't take this or that measure if it has to be taken," Passos Coelho said earlier this week when asked about more measures.

Opposition politicians and businesses have urged the government not to adopt more austerity, fearing that it could send the economy further into a downward spiral.

Economists and investors had speculated before the 'troika' of inspectors arrived that, given its good compliance record, Portugal might be granted some leeway on its fiscal goals.

The government has hoped Portugal would emulate fellow-bailout recipient Ireland, rather than Greece, in returning to growth after reforming its economy.

So far Lisbon has won strong praise in Europe for its single-minded focus on reforming the economy but economic growth remains elusive. But Portuguese bonds have benefited strongly from the European Central Bank's bond buying plan, reducing the country's risk premium.

The economy is expected to contract more than 3 percent this year, worsening already record high unemployment.

(Reporting By Axel Bugge; Editing by John Stonestreet)