Portugal’s top court rejects part of government’s austerity plan

Portugal’s Constitutional Court on Thursday rejected part of the government’s austerity measures, but approved a temporary reduction in civil servants’ pay.

The country’s top court rejected a tax of two to three percent on pensions starting at 1,000 euros ($1,300), which was supposed to bring in 372 million euros in 2015, because it did not ensure “fairness between generations”, Joaquim de Sousa Ribeiro, the head of the court, told reporters.

At the same time the court approved cuts to public workers’ salaries of more than 1,500 euros ($2000) a month through next year. But it said that for them to continue into 2016 would be unconstitutional as “prolonging the sacrifice would violate the principle of equality” between civil servants and workers in the private sector, Sousa Ribeiro said.

President Anibal Cavaco Silva had asked the court in late July to make “preventive checks” to ensure the reforms conformed with Portugal’s constitution.

The government had warned against a rejection of the reforms, saying such a move would undermine its goal of reducing the deficit to four percent of gross domestic product (GDP).

The court had already rejected some austerity measures in May, which were included in Lisbon’s 2014 budget as part of the centre-right government’s ongoing cutbacks.

Portugal exited a three-year international bailout programme in May, after receiving 78 billion euros from the European Union and the International Monetary Fund in exchange for a series of stringent reforms in the eurozone country.