Portugal government set to debate draft 2014 budget with more austerity measures ahead

Now Reading:

Portugal government set to debate draft 2014 budget with more austerity measures ahead

Text size Aa Aa

The Portuguese parliament is debating a draft budget for 2014. It includes proposed spending cuts as the country aims to gain full access to debt markets in June next year at the end of its three-year bail out.

It’s feared the move risks deepening discontent. Raising the retirement age by a year to 66 and cutting pensions are among the measures on the table.

The Constitutional Court could block the moves as it has in the past. The Eurogroup has already voiced its concern over the Court’s power of veto.

“We are convinced these are the right measures. They were established after a rigorous study on the need to reduce public expenditure. The risks mentioned of the role of a constitutional veto by the court was not a criticism. It was an objective evaluation on an aspect that can make changes in the way the programme can progress,” explained Finance Minister Maria Luis Albuquerque.

The budget will include tax inducements for companies with a reduction in their basic rate from 25 to 23 percent but in the public sector salaries could be slashed by up to 12 percent as the government aims to trim spending by about four million euros.

Paulo Sá the parliamentary leader of the Communist Party spelled out his objections to the draft budget.

“Austerity and more austerity. Re-enforce and always affecting the same people. We say that, if this is the government’s way, it will not produce different results from those which we have seen in the last two years with this same policy,” he said.

Analysts believe the government faces walking a tightrope as it looks to meet the demands of the country’s EU-IMF creditors while avoiding social disruption over its planned measures.

Earlier moves to persuade its creditors to raise the deficit target from four to 4.5 percent failed.