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Portugal seeks easing of 2014 deficit goal

Portugal on Wednesday urged its international lenders to ease its 2014 public deficit reduction target from 4 percent to 4.5 percent of GDP.

Deputy Prime Minister Paulo Portas said it was no secret that Portugal and the so-called troika of international creditors — the EU, IMF and ECB — had differed on the target for reducing the deficit.

During the latest review, “the Portuguese government had argued for a 4.5 percent public deficit but the troika had asked for 4 percent,” Portas said.

“The government believes that the target it proposed remains more appropriate,” he added.

Finance Minister Maria Luis Albuquerque said “we will raise this point during the next review of our programme that begins on Monday.”

The troika has already twice relaxed Portugal’s deficit target.

The government is obliged to reduce the public deficit, which also includes social welfare and spending by local authorities, from 6.4 percent of GDP last year to 5.5 percent this year.

Albuquerque said the government intends to stick to the 2013 target thanks to a recent improvement in the economy, which exited recession in the second quarter.

Portugal has undertaken often politically unpopular spending cuts and tax hikes in order to improve its public finances and receive funds under the 78-billion-euro ($103 bn) bailout it agreed in May 2011.