EU warns of risk to Portuguese budget targets

Portugal can still reach its 2012 budget targets but the risk of failure has grown significantly, the European Commission said on Tuesday.

The goal of reducing Portugal’s public debt to 4.5 percent of gross domestic product this year is achievable but might be hampered by a large drop in tax revenues in the slowing economy, the European Union’s executive arm said.

It was reporting on progress made since Portugal was thrown a lifeline worth 78 billion euros ($96 billion) in May 2011 to prevent it from going under.

The Commission acknowledged that Portugal was generally on track with respect to the terms of the bailout, which was a joint effort by the EU and the International Monetary Fund.

The IMF said Monday that it would release 1.48 billion euros in new funds to Portugal after Lisbon passed a performance review of the bailout accord.