27 May 2013

Portugal deficit goals intact but new easing an option

Portugal has not requested any new easing of budget goals set out under its bailout, but its European partners could consider more flexibility if its long recession worsens while reforms remain on track.

Jeroen Dijsselbloem said it was important for Lisbon to stick to its recently revised budget targets and to carry out structural reforms. "There is a great appreciation in the Eurogroup on how Portugal is tackling challenges, with the economy doing worse than expected", Dijsselbloem said.

Under the terms of a €78 billion bailout agreed in 2011 and last revised in March, Lisbon must reduce the public deficit to 5.5 per cent of GDP this year from last year's 6.4 per cent, then to 4 per cent in 2014 and 2.5 per cent in 2015. "Now the Portuguese government is fully committed to work on that basis", Dijsselbloem said.

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© Reuters