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Portuguese parliament adopts 2014 austerity budget

Published on 26/11/2013

The Portuguese parliament on Tuesday adopted a tough new austerity budget for the debt-wracked nation, as thousands of angry protestors rallied outside.

The text was adopted by lawmakers of the ruling centre-right coalition, who hold 132 of 230 seats, overriding the left-wing opposition which voted against.

The 2014 budget aims to save 3.9 billion euros ($5.3 billion), partly through cutting public sector salaries and pensions.

Thousands of protestors massed outside the parliament chanting “Government resign!” and “Enough of these crooks!”, as lawmakers held the vote.

Portugal secured a 78-billion-euro ($104 million) economic bailout by the International Monetary Fund and European Union in May 2011, slated to end in June next year.

As a condition of the rescue, Lisbon has had to enact a series of austerity reforms to get its finances in check, which has deepened the recession and destroyed one in seven jobs, according to the International Labour Organization.

Unemployment hit a record 17.7 percent in the first quarter of this year.

The scale of the reforms and the painful impact of recession have sparked mass street protests, provoking a political crisis over the summer that nearly brought down Prime Minister Pedro Passos Coelho’s coalition government.

Outside parliament, 61-year-old retired civil servant Isabel Quintas said that “even if this rally does not change the outcome of the vote, it is important for the government and lawmakers to know the Portuguese are against these measures.”

The government views the budget measures as critical.

“The 2014 budget is a decisive step for Portugal to recover its financial autonomy” and “conclude its financial assistance programme” as planned in June 2014, said Finance Minister Maria Luis Albuquerque during the debate.

The budget still needs approval from the Constitutional Court, which triggered a political crisis once before by rejecting tax measures intended to meet bailout terms, and is due to rule in coming weeks on the proposed civil servant wage cuts.

The 2014 budget will cut civil servant wages by between 2.5 and 12 percent for those who earn more than 675 euros per month before taxes, which has sparked the anger of unions and the left-wing opposition.

Retired civil servant pensions worth more than 600 euros will be cut by 10 percent.

The age for receiving a full pension is being hiked to 66 from 65 currently, and spouse pensions are being means-tested.