Portugal PM to address nation; more austerity seen

Portugal PM to address nation; more austerity seen
# 07 September 2012 20:21 (UTC +04:00)
Baku-APA. Portugal’s Prime Minister Pedro Passos Coelho will outline new austerity measures late on Friday, media reported, as the country struggles to meet tough fiscal goals set under its international bailout, APA reports quoting news.yahoo.com website.

Passos Coelho will make "a declaration to the country" to be broadcast at 1820 GMT, the government said in a statement. It gave no further details.

Inspectors from the European Commission, European Central Bank and IMF are in Portugal finalizing the fifth quarterly review of the country’s performance under its 78-billion-euro rescue package.

State broadcaster RTP and business daily Jornal de Negocios said the premier would detail additional austerity measures in the statement.

Economists have said Portugal is unlikely to meet its budget deficit goals this year and next because its deepest recession since the 1970s has undermined tax revenues. The shortfall would either have to be countered by delaying budget goals or with more austerity, economists say.

"We all undoubtedly want to overcome our difficulties without overburdening the Portuguese with taxes, but none of us - absolutely none - is in conditions to say that we won’t take this or that measure if it has to be taken," Passos Coelho said earlier this week when asked about more measures.

Opposition politicians and businesses have urged the government not to adopt more austerity, fearing that it could send the economy further into a downward spiral.

Economists and investors had speculated before the ’troika’ of inspectors arrived that, given its good compliance record, Portugal might be granted some leeway on its fiscal goals.

The government has hoped Portugal would emulate fellow-bailout recipient Ireland, rather than Greece, in returning to growth after reforming its economy.

So far Lisbon has won strong praise in Europe for its single-minded focus on reforming the economy but economic growth remains elusive. But Portuguese bonds have benefited strongly from the European Central Bank’s bond buying plan, reducing the country’s risk premium.

The economy is expected to contract more than 3 percent this year, increasing an already record high unemployment rate.