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Portugal will press ahead with tough austerity measures next year to meet the terms of its EU-IMF bailout despite a clouded global economic outlook, the prime minister said on Thursday.
“The international and European environment is very delicate and disadvantageous for us,” Prime Minister Pedro Passos Coelho told parliament at the beginning of a debate on the 2012 budget.
“However, we have to concentrate, to do well and on time everything which depends on our own efforts, our abilities and our determination,” said Passos Coelho who came to power after elections in June just after Lisbon had to call on the EU and International Monetary Fund for a massive debt bailout.
“The proposed budget is very tough,” he said, recognising “the weight of the sacrifices that will be required of all the people.”
Among other provisions, the budget ends the payment of two extra monthly payments per year for civil servants and pensioners with income above 1,000 euros per month while the working day will be increased by 30 minutes in the private sector.
“Because it is a realistic budget, balanced, robust, it is the way forward for the Portuguese economy at this difficult time,” the prime minister said at a time of great tensions within the eurozone as Italy teeters on the brink under a huge debt mountain.
Portugal followed Greece and Ireland in needing a bailout and EU, IMF and European Central Bank officials are currently in Lisbon to review progress under the 78-billion-euro ($57 billion) bailout deal agreed in May.
Coelho’s centre-right government has previously called on its partners to adjust the terms of the deal but has not called for more funds.
Lisbon needs the all clear from the EU, IMF and ECB auditors to receive the next 8-billion-euro loan installment.
Under the accord, Portugal needs to reduce its public deficit from 9.8 percent of Gross Domestic Product in 2010 to 5.9 percent by the end of 2011, but it stood at 8.3 percent earlier this year, putting that objective in doubt.