Portugal to trim 4.8bn euros
May 4, 2013
Portuguese Prime Minister Pedro Passos Coelho outlined a new proposal aimed at tackling the country's budget deficit during a national television address on Friday. The announcement came nearly a month after the country's constitutional court ruled four previous austerity measures unconstitutional.
"With these measures, our European partners cannot doubt our commitment," the prime minister said in his address. "The choice is not between austerity and no austerity. Not meeting the terms would cause us to leave the euro and have catastrophic consequences for all."
Under his center-right government's new proposal, Portugal would save 4.8 billion euros ($6.3 billion) by trimming public sector positions and demanding more from the remaining workers.
A voluntary redundancy program would cut 30,000 of the public sector's nearly 600,000 employees. The work week for the remaining employees would increase from 35 hours to 40 hours, equal to that of the private sector.
The austerity measures would also target retirement plans, requiring public sector workers to contribute more to pensions and work until age 66 before becoming eligible for retirement.
Cutting the deficit in stages
In 2011, the European Union and the International Monetary Fund (IMF) granted Portugal a bailout worth 78 billion euros. In order to receive the emergency funds, Lisbon agreed to reduce its budget deficit in phases, with a goal of ultimately lowering it to 2.5 percent of gross domestic product (GDP) by 2015.
Friday's proposals were aimed at lowering the budget deficit from 6.4 percent to 2013's target of 5.5 percent to secure the next tranche of its EU-IMF bailout.
Portugal's opposition party must still debate the measures before they can pass.
As in other debt-ridden EU countries, unrest has been on the rise in Portugal amid rising unemployment, which has topped 17 percent.
Prime Minister Passos Coelho called on the country to help bring the fiscal problems under control on its own while it has international lenders to provide financial support.
"The idea that Europe will always come to our aid is wrong," the prime minister said.
kms/lw (AP, AFP, Reuters, dpa)