Home News Under EU pressure, Portugal cuts 2016 deficit target

Under EU pressure, Portugal cuts 2016 deficit target

Published on 05/02/2016

Portugal said on Friday it had cut its budget deficit target for 2016 to 2.2 percent of gross domestic product (GDP) from a previously announced target of 2.6 percent.

The government — under pressure from Brussels to adopt more austerity — also cut its GDP growth forecast to 1.8 percent for this year from 2.1 percent previously, Finance Minister Mario Centeno said at the presentation of his draft budget.

“It’s a responsible budget which respects our international commitments but it’s also a different budget which shows that there is an alternative” to an austerity policy, he said.

The European Commission on Friday approved Portugal’s draft budget for 2016 but warned that more efforts would be needed by the socialist-led government to avoid a breach of EU rules on spending.

Portugal received a massive international debt bailout in 2011 that saved it from defaulting, but in return the country had to introduce a string of austerity measures.

In a letter addressed to Brussels Friday, the Portuguese government pledged to implement additional measures to save 1.1 billion euros, including through a tax hike on fuel, vehicles and alcohol.

Last year, Portugal’s budget deficit came in at 4.2 percent, well above the EU’s 3.0-percent limit.