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Portugal gets 3 years' budgetary grace

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Portugal gets 3 years' budgetary grace

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Portugal today became the second EU country after Italy to get an extended period of time to tackle its budget deficit.

It is currently the highest in the EU, and is more than double the limits imposed by the stability pact policed by the European Commission. At six point two percent of GDP it busts the three percent limit wide open, and is so daunting Portugal will now have until the end of 2008 to tame it. The spokeswoman for the Economic and Monetary affairs commissioner is Amelia Torres; “What we are interested in is the correction of the deficit in a lasting and sustainable way, and not to find ourselves in this position every year, with a budgetary hole to patch up”, she said. The commission recommends Portugal slashes the deficit by one and a half percent of GDP next year, and by three quarters of a percent the following two years. It is believed anything stricter could stifle the country’s weak return to growth.