Bailout support pledged for Portugal

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Bailout support pledged for Portugal

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Portugal has been promised continued bailout support by the head of the eurozone finance ministers.

Speaking after meeting Portuguese political leaders in Lisbon, Jeroen Dijsselbloem said that could include being allowed more time to hit budget deficit targets.

For its part, Portugal has to stick to those recently recently-revised targets and carry out structural reforms.

Dijsselbloem told reporters: “Has there been a request from the side of the Portuguese government to re-negotiate it’s timetable and the targets? The answer is no. Because we only just completed talks on the basis of the seventh review (by inspectors from the European Union, the International Monetary Fund and the European Central Bank). The targets will be adjusted, another year will be given to the Portuguese government in the programme. And now the Portuguese government is fully committed to work on that basis with the European partners, and the European partners are fully committee.”

With its economy shrinking – by a projected 2.3 percent this year – Portugal has been struggling to meet its bailout commitments. They include the budget deficit being cut to 5.5 percent of GDP this year, from 6.4 percent in 2012, and debt being reduced to 124 percent of GDP.

The austerity moves that had to be enacted in return for 78 billion euros in bailout money included spending cuts and tax increases that the finance minister Vitor Gaspar called “very costly’‘ during his meeting with Dijsselbloem.

Dijsselbloem added: “In the Eurogroup, there is great appreciation for the way that Portugal takes on these challenges, knowing how hard it is; knowing that the economy is showing more problems than we anticipated. So, that is the basis for our appreciation.”

Portugal is in a steep recession with unemployment at 17.7 percent.

Lisbon requested a bailout in April 2011. Since then, budget targets have been relaxed twice.