Portugal warns of deficit target miss

Portugal may request a third revision to deficit targets agreed with EU-IMF creditors as part of its 78-billion euro international bailout, Prime Minster Pedro Passos Coelho warned Friday.

“It is not excluded that it will be necessary to ask for further revision for 2014,” Coelho said in parliament.

The revision from the agreed 4.0 percent of output would be the third one granted to Portugal after already winning leniency from the European Union and International Monetary Fund in March and December.

The warning comes as a new government spending package, announced by the centre-right government earlier this month, foresees the slashing of 30,000 public sector jobs out of a total 700,000.

The new terms are aimed at ensuring continued aid payments from a package worth 78 billion euros ($102 billion) granted in May 2011.

Passos Coelho said that the 2013 deficit target of 5.5 percent of gross domestic product would however be met, even though budget figures for the first three months of the year were already off the mark.

Hit hard by the eurozone debt crisis, Portugal’s economy has been in recession for two years, and contracted by another 0.3 percent in the first quarter with unemployment at a record high of 17.7 percent.

On Thursday, Portugal unveiled a massive tax credit for businesses that make investments up to 5 million euros.