Portugal’s international lenders have given the green light for the country to receive its next instalment of bailout loans.
Inspectors from the IMF, the European Commission and the European Central Bank agreed that Lisbon had made good progress on reducing its debts and economic reforms.
Vitor Gaspar, Portuguese finance minister, warned of tough times ahead with the economy to be at its weakest in 2012.
“Economic activity should hit bottom next year, with a total contraction in the 2011-12 period of more than four per cent. During these two years, the unemployment rate will increase to very high levels,” he said.
Portugal’s centre-right government is cutting spending and raising taxes to meet the terms of a 78-billion-euro bailout agreed in April.
Parliament approved next year’s austerity-driven budget last Friday.
The measures include freezing promotion for civil servants, who will also lose annual bonus payments worth two months salary.
The proposed cuts prompted a mass protest by the country’s public sector unions in Lisbon on Saturday.