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Portugal’s parliament to adopt austerity budget

Portugal’s parliament was expected to adopt a 2012 austerity package Wednesday that it hopes will rescue the country’s crippled economy despite the risk of worsening social unrest.

Just days after thousands of workers descended onto Lisbon’s streets to join a protest strike, lawmakers were preparing for a final vote on an unpopular budget package that cuts salaries and increases working hours for vast numbers of workers already squeezed by recession.

Already approved on a first reading, the bill enjoys solid support from the centre-right majority in parliament and the opposition socialists have said they intend to boycott the vote.

Ahead of the vote Prime Minister Pedro Passos Coelho said he was aware of the “enormous effort” required of Portuguese citizens to overcome the financial crisis while Foreign Minister Paulo Portas added the country “is in a very difficult situation.”

After Greece and Ireland in 2010, Portugal became the third eurozone member state needing a bailout in May when it could no longer raise fresh funds at sustainable rates on the financial markets.

The budget provides for the suspension of 13th and 14th month salary payments for civil servants.

Employees in the private sector will see their working day increased by 30 minutes while health and education spending will be slashed, topping off a series of measures already adopted in efforts to reduce the deficit.

Portugal needs to reduce its public deficit from 9.8 percent of gross domestic product in 2010 to 5.9 percent by the end of 2011 but it stood at 8.3 percent earlier this year, putting that objective in doubt.

The forecast for 2012 looks no better, after the announcement by Finance Minister Viktor Gaspar last week that its economy is expected to shrink by three percent in 2012.

Unemployment is also set to rise to a record rate of 13.4 percent.