Lisbon to unveil tough austerity plans

30th June 2011, Comments 0 comments

The Portuguese government unveils later on Thursday austerity measures to stabilise the public finances which it claims will be even tougher than those demanded by the EU and IMF for their debt bailout.

The proposals, which Prime Minister Pedro Passos Coelho said earlier would sober up the country after a debt binge, are due to be submitted to parliament at around 1400 GMT.

The centre-right prime minister, who ousted a Socialist government in June 5 polls, will "focus on ensuring that the (EU-IMF) targets are met," the premier's office said.

"This implies anticipating some of the measures envisaged in the (EU-IMF) accord and in time, the adoption of extraordinary measures," it added.

Press reports suggest the government might levy an additional salaries tax and increase sales tax for certain goods and services from July.

The EU and International Monetary Fund agreed a 78-billion-euro ($112-billion) debt rescue plan with Portugal in April, after earlier bailouts for fellow eurozone strugglers Greece and Ireland.

In return for funding, Lisbon agreed to cut its public deficit to 5.9 percent of gross domestic product by the end of the year from more than 9.0 percent in 2010 and to bring within the EU limit of 3.0 percent of GDP by 2013.

Associated budget cuts under the three-year aid package are expected to cause the Portuguese economy to contract by around 2.0 percent this year and next.

© 2011 AFP

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