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Portugal pushes more austerity but pares down measures

Published on 06/11/2015

Portugal's centre-right minority government on Thursday extended austerity measures for another year, though some were softened, to push through a delayed 2016 budget following October elections.

“It is clearly impossible to have a budget for January 1, 2016”, forcing the government to take “a series of measures to prevent the risk of financial failure”, Finance Minister Maria Luis Albuquerque said at a news conference.

The bill was adopted by cabinet, but will need to be approved by parliament where opposition left-wing lawmakers are in the majority.

The government maintained a surtax on wages to reduce the country’s deficit, but reduced it by nearly a percentage point in an effort to appease parliamentarians.

Pedro Passos Coelho’s coalition is also bidding to maintain cuts to civil servants’ salaries while pensions contributions will also be reduced.

“If these measures are not taken, the state risks facing a shortfall of 1.5 billion euros ($1.63 billion) in 2016,” Albuquerque said.

Although Passos Coelho’s coalition won the October 4 elections, it lost the absolute majority it had enjoyed since 2011, taking only 107 of the parliament’s 230 seats.

The opposition Socialist Party, which came second in last month’s polls, is seeking to oust his government in tandem with other left-wing radical groups which are seeking austerity relief.

Passos Coelho’s new administration will present its programme to parliament on November 9, but the Socialist Party and its other left-wing allies, which between them won 122 seats, have vowed to pass a motion against the blueprint in a vote that would take place a day later.

If they succeed, it would automatically bring down the government.

The European Commission, meanwhile, is awaiting Portugal’s budget, which was supposed to arrive in Brussels by October 15.