Portugal to cut spending further after budget deal

City A.M. Reporter
Portugal’s government will cut 2011 spending further to ensure it meets its budget deficit target after a deal with the opposition to pass an austere 2011 budget, Prime Minister Jose Socrates said yesterday.

The deal hammered out last Friday included concessions by both the minority government and the main opposition Social Democrats (PSD). This created a gap of €500m (£438m) in the budget bill, which must be closed to meet next year’s deficit target of 4.6 per cent of GDP.

“This will be achieved via a generic reduction in various sectors of public spending and an increase in non-tax revenues,” Socrates said during the presentation of the bill in parliament.

PSD leader Pedro Passos Coelho said earlier the government “has committed itself to presenting measures that reduce primary public spending to counterbalance the €500m”.

Socrates would not say what part of the sum will be saved via spending cuts, but his remarks suggested non-tax revenue will account for a small share, as proposed measures on that front include a tender of mini-power plant concessions and better management of state property.