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Portugal seeks delay of international creditors’ next audit

Published on 12/07/2013

Portugal on Thursday called on its international creditors to postpone their assessment of the heavily indebted country's accounts from July 15 to the end of August, amid a political crisis.

Lisbon also asked its creditors — the European Commission, European Central Bank and the International Monetary Fund — to carry out the next two scheduled assessments at the same time, a finance ministry statement said, citing “the current political situation” as the reason for its request.

Portugal has made this request so that “the adjustment programme can be concluded by the expected deadline”, said the statement.

The troika of creditors carries out an evaluation of reforms and austerity measures put in place by Portugal in exchange for a bailout package worth 78 billion euros. The rescue package is due to run until June 2014.

Portuguese Prime Minister Pedro Passos Coelho was last week forced to reshuffle his cabinet after two shock resignations by key ministers.

While Portuguese President Anibal Cavaco Silva said he approved the reshuffled coalition, fears that the crisis was not over surfaced as it appeared that the president’s approval was half-hearted, since he also recommended the formation of a government that is backed by the socialist opposition.

At the heart of the crisis is a dispute over the painful spending cuts and tax increases enacted as a condition of the bailout, which was agreed with the troika in May 2011.

The financial rescue programme was negotiated by the Socialist Party when it was in power but has been implemented by the centre-right coalition, which won snap elections in June 2011.

The austerity measures are widely blamed for exacerbating Portugal’s three-year recession, however, and the resulting hardship has sparked growing street protests.

Portugal forecasts a 2.3-percent economic contraction this year and has a record unemployment rate of more than 18 percent.