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Portugal vows quick budget action after court block

Published on 20/12/2013

Portugal's prime minister vowed on Friday to find alternatives "as quickly as possible" to a key austerity measure in its 2014 budget that was blocked the previous day by the country's top court.

Pedro Passos Coelho told reporters on the sidelines of a European leaders’ summit in Brussels that they would scramble to find a “new, durable and efficient measure” that would “satisfy the objectives fixed by the international creditors” of the country.

Late on Thursday, the Constitutional Court quashed a part of the budget that foresaw a 10-percent cut in civil service pensions.

“I will do everything possible to end the climate of uncertainty created by this situation,” he said at a news conference relayed on Portuguese television.

The court case was a major blow to the bailed-out country and came just three days after international auditors from the European Commission, International Monetary Fund and European Central Bank had given Lisbon the all-clear on the terms of its 78-billion-euro ($104-billion) aid package.

The savings from the pension cuts have been estimated at 388 million euros, or one tenth of the austerity measures that total 3.9 billion euros.

The cuts were a key plank of the government’s target of bringing the public deficit down to 4.0 percent of output next year and the government must now find the savings elsewhere.