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Portugal determined to push through austerity plan: PM

Portugal is determined to press ahead with a rescue package designed to drag the country out of its debt crisis, Prime Minister Pedro Passos Coelho said Sunday, as international auditors visited.

The government would pursue the plan with “determination and audacity” he told members of his centre-right Social Democratic Party (PSD).

The plan includes controversial austerity measures designed to balance the country’s books, undertaken in return for an International Monetary Fund and European Union rescue package worth 78 billion euros ($98 billion).

But experts commissioned by parliament say that Portugal’s public deficit is expected to reach 6.7 to 7.1 percent of output for the first half of this year, far off the government’s target of 4.5 percent.

And unemployment hit a record level of 15 percent of the workforce in the second quarter. Critics fear that tightening the fiscal screws further will very likely push that even higher.

Passos Coelho acknowledged that the rescue package was “very demanding” especially given what he said was the “rising uncertainties and an economic slowdown in Europe.”

But he added: “We have ambitious objectives.”

The plan had already borne fruit in cutting state spending, he added.

But Jose Seguro, leader of the main opposition Socialists, said the government’s policy, which he described as pushing through austerity measures whatever the cost, had failed on every level.

“The government has failed in the objective of the deficit this year… just as it had already failed in its fight against unemployment and to get the economy back on its feet,” he said during a party meeting.

On Wednesday, Seguro is due to meet representatives of Portugal’s international creditors: the European Union, the International Monetary Fund and the European Central Bank.

These officials are on their fifth visit to the country to monitor the government’s progress in pushing through the agreed policies.

Seguro said he would insist on the importance of prioritising jobs and financing the economy.

The government needed more time, at least a year more, to put the public finances in order, he added.