Portugal passes new austerity package

Portugal’s new parliament has passed a four-year package of austerity reforms without a hitch as its opposition produced no objections that needed a vote.

The new government, a centre-right coalition, has committed to meeting the terms of the country’s international bailout and wants to meet the targets early.

It has a comfortable majority in parliament, in contrast to the previous minority Socialist government formed by former prime minister Jose Socrates, who resigned amid opposition for austerity reform to avoid a bailout.

"The government now has all the conditions of parliament's endorsement for its programme, and it's time to start working intensely," said new prime minister Pedro Passos Coelho.

The legislation just passed includes proposals to raise value-added tax on some goods and cut income tax benefits, while reducing social security contributions by companies.

The government has also said it will proceed with privatisations and sales of stakes in companies such as the EDP utility and REN power grid operator in the third quarter.

It will also sell the TAP airline and the insurance arm of state-run bank CGD.

Yesterday, Passos Coelho also said the government will slap a one-off levy on year-end salary bonuses in 2011 to help the country meet its budget deficit target of 5.9 percent of gross domestic product.

Paulo Portas, foreign minister and leader of the CDS-PP party in the ruling coalition, lauded "the spirit of compromise and openness that marked the programme discussions in parliament".

Newly found political stability and support for austerity should help Portugal ride out its crisis, he said.