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Portugal's latest cut - the finance minister

Portugal's latest cut - the finance minister
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In a surprise move, Portugal’s Finance Minister, Vitor Gaspar, has resigned.

The architect of the country’s austerity plans, under a 78-billion-euro EU and International Monetary Fund bailout, he has been blamed by the Portuguese people for the devastating effect on the country’s economy.

His departure is not expected to mean an easing of the austerity.

His replacement is the Treasury Secretary Maria Luis Albuquerque, who also backs the government spending cuts and Lisbon has to continue with them to keep getting bailout money.

Under Gaspar’s policies, Portugal is in its third year of recession with unemployment at record highs following the biggest tax hike in living memory, which was aimed at raising revenues to plug the budget deficit

The problem is the deficit is not coming down fast enough. The target this year is for it to fall to 5.5 percent of GDP, but in the first quarter it was 10.6 percent.

At the last review by its international lenders, Portugal did win an easing of tough budget goals and Prime Minister Pedro Passos Coelho has suggested he may request a fresh relaxation for next year if the economic outlook worsens.

With Reuters