Portugal to have independent budget body: future PM

Incoming Portuguese Prime Minister Pedro Passos Coelho said on Tuesday that his government will create an independent budget authority with “broad powers” as part of the battle to clean up Portugal’s public finances.

“This new institution will be formed by two institutions which are independent in Portugal, the Bank of Portugal and the Court of Auditors,” he said in an interview with French business daily Les Echos.

Passos Coelho said the authority would be made up of “independent personalities, including foreigners, in order to be totally transparent with regard to budget consolidation, as well as the finances of companies owned by the state, the regions and municipalities.”

“It will have very broad powers,” added the leader of the centre-right Social Democrats which won an early general election on Sunday.

His government will be charged with pushing through deep spending cuts and economic reforms under a bailout agreement reached in May with the European Union and the Internatinal Monetary Fund and the European Central Bank in exchange for a 78 billion euro ($114 billion) bailout.

Portugal’s public debt swelled to 93 percent of gross domestic product in 2010 from 68 percent in 2007.

The European Commission, the executive arm of the European Union, forecasts the debt will increase to 101.7 percent this year and 107.4 percent in 2012.

The Social Democrats won 105 seats in the 230-seat legislature in the election and Passos Coelho has said he will seek to govern with the smaller conservative CDS-PP party which garnered 24 seats.