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Portuguese govt announces $1.46b spending cuts

Xinhua | Updated: 2013-04-19 10:53

LISBON - The Portuguese government announced on Thursday spending cuts worth 800 million euros ($1.46 billion) or some 0.5 percent of its GDP in a fresh effort to meet its deficit reduction targets set by international lenders after a rejection of some of the austerity measures in the 2013 state budget by the country's constitutional court.

Budget Secretary of State Luis Morais Sarmento told a press conference that the new measures will affect spending on public sector staff, goods and services.

Portuguese govt announces $1.46b spending cuts

Businessmen chat in downtown Lisbon April 18, 2013. The Portuguese government approved around 800 million euros of new spending cuts on Thursday to put its EU/IMF bailout back on track after some of its austerity plan was thrown out by the constitutional court. [Photo/Agencies]

The measures will allow Portugal to meet a budget shortfall of 1.3 billion euros, which resulted from the Constitutional Court ruling earlier this month that some of government's austerity measure are illegal, Sarmento said without giving further details.

Representatives of the troika comprising the European Union, the International Monetary Fund and the European Central Bank who were on a visit in Lisbon this week, failed to seek a political consensus between the government and the main opposition Socialist Party in further public spending cuts.

After his respective meetings with Prime Minister Pedro Passos Coelho and representatives of the troika earlier on Wednesday, Secretary-General of the Socialist Party Antonio Jose Seguro told reporters that the meetings were "essentially nothing new" while reaffirming their differences over the government's implementation of the tough austerity measures.

The troika who has completed the visit to Portugal said in a statement that "discussions will continue with the aim of securing a timely completion of the seventh review".

Under a 78-billion-euro bailout agreement with the troika in May 2011 Portugal has been implementing a harsh austerity policy which has sparked widespread protests across the country in recent months.

The Constitutional Court ruling on April 5 has made it more difficult for the Portuguese government to meet its newly readjusted public deficit target of 5.5 percent of its GDP this year by the troika as the government has to further reduce public spending to compensate for the 1.3-billion-euro loss.

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