Germany hails Portugal's austerity efforts

14th October 2011, Comments 0 comments

The German government Friday saluted Portugal's fierce austerity drive to reduce its mountain of debt, saying it was "on the right track."

Berlin has "great respect for the way the Portuguese government and people have embarked on the very difficult path of reforms and change to the structure of their economy," said Chancellor Angela Merkel's spokesman, Steffen Seibert.

He said Lisbon was prioritising budgetary consolidation in a way that had not been seen for years. "In our view, this means that Portugal is on the right track," Seibert told a regular government news conference.

He nevertheless stressed that he could not comment directly on measures Prime Minister Pedro Passos Coelho announced on Thursday.

Telling citizens that Portugal faced a "national emergency", Coelho unveiled a raft of policies aimed at reducing the public deficit from 9.8 percent of output in 2010 to 5.9 percent by the end of this year.

VAT was set to be hiked, private sector employees asked to work 30 minutes more per day and health and education budgets slashed.

Lisbon also announced the temporary suspension of 13th and 14th month salary payments for civil servants.

Seibert stressed it was down to an international team of auditors to assess the effectiveness of Lisbon's efforts.

In May, Portugal received a 78-billion-euro ($108-billion) bailout from the European Union and International Monetary Fund, conditioned on a tough austerity programme.

© 2011 AFP

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