Portugal may get more time to cut deficit: prime minister

Portugal’s prime minister on Tuesday said his country may be granted more time to meet its fiscal targets as the implementation of its international bailout was under review.

“There is a possibility of getting one year more to adjust the state deficit and it is very likely that this is up for discussion”, Pedro Passos Coelho said as the so-called Troika of public creditors — the European Union, the European Central Bank and the International Monetary Fund — on began its latest review of the country’s finances.

Portugal was granted a financial rescue package worth 78 billion euros ($103 billion) in May 2011, in exchange for a pledge to straighten out its finances via austerity measures and economic reforms.

Last year the Troika gave eased Portugal’s fiscal targets given the recession in the country and across much of the eurozone.

Lisbon now has to reduce its public deficit to 4.5 percent of GDP this year, instead of bringing it back within the EU ceiling of 3.0 percent of GDP.

The government has recently conceded it may be impossible for it to reach even the revised targets given the continued recession.

On Sunday, Finance Minister Vitor Gaspar said the economy is expected to contract around 2 percent this year, or double that of its previous forecast, and said he hopes the European Commission will give Portugal another year to reach the 3.0 percent target.

Passos Coelho said his country would like to “finish the (rescue) programme in June 2014 and we will neither ask for more time or more money.”