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Portugal lawmakers clear new austerity budget

Published on 07/06/2013

Portugal's parliament adopted Friday a revised budget aiming to keep its finances on track as part of its international bailout after the country's top court rejected several measures in the initial plan.

“This revised budget includes measures which will permit us to respect the target of a public deficit of 5.5 percent of GDP at the end of the year,” Finance Minister Vitor Gaspar.

The budget passed easily thanks to the solid majority the centre-right government holds in parliament, with opposition parties voting against.

Lisbon was forced to re-think its spending plans after the country’s Constitutional Court in April rejected several measures in the 2013 budget.

The court had in particular rejected the government cutting the annual bonus of state employees by half, to the equivalent of one month’s salary.

The revised budget will raise the weekly work hours of state employees from 35 to 40, increase their contributions towards social benefits, and cut 30,000 out of 700,000 jobs in the bureaucracy.

Portugal was forced into taking a 78-billion-euro ($103-billion) bailout from the EU and IMF in May 2011 when it could no longer raise funds on bond markets at normal rates.

The country’s economy has contracted sharply and unemployment shot up as the government cuts back on spending and raises taxes as required under the bailout programme.

Portugal’s economy is expected to contract by a further 2.3 percent this year and joblessness has hit a record 18.2 percent.