Portugal says it will undershoot budget deficit ceiling

Portugal’s public deficit should not exceed 4.5 percent of output this year, well below the ceiling of 5.9 percent set by creditors, the prime minister’s office said on Tuesday.

Until now the centre-right government headed by Pedro Passos Coelho had a target of reducing the deficit to 5.9 percent of output this year and then 4.5 percent next year and to 3.0 percent in 2013.

Last year, the public deficit covering the central welfare and local authority budgets amounted to 9.8 percent of gross domestic product.

Portugal has been rescued with loans of 78 billion euros ($103 billion) from the European Union and International Monetary Fund in exchange for radical reforms to correct the budget and restructure the economy.