Portugal to present bailout review, shrugs off duration

LISBON Wed Mar 13, 2013 8:16pm GMT

Portugal's Finance Minister Vitor Gaspar reacts during a news conference in Lisbon November 19, 2012. REUTERS/Hugo Correia

Portugal's Finance Minister Vitor Gaspar reacts during a news conference in Lisbon November 19, 2012.

Credit: Reuters/Hugo Correia

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LISBON (Reuters) - Portugal will announce the outcome of the seventh review by creditors of its bailout on Friday, it said on Wednesday after shrugging off queries about why the review lasted about a week longer than previous ones.

The review comes at a time of increasingly loud demands by opposition politicians and business for an easing of austerity as the indebted country struggles through its third year of recession during its worst downturn since the 1970s.

The finance ministry said in a statement late on Wednesday that Finance Minister Vitor Gaspar will present the findings of the review at 9:30 a.m. British time on Friday.

As in previous reviews of Portugal's programme, the 'troika' of lenders - the European Commission, the International Monetary Fund and the European Central Bank - will not take part in the presentation.

The duration of the review has led to speculation that Lisbon may be pushing for concessions in the face of the mounting domestic criticism of the centre-right government's austerity drive. Previous reviews lasted two weeks.

The government, however, brushed off questions about the matter earlier in the day.

"The main part of the (review) work is concluded, but there are still some elements and some documents which are not closed," Prime Minister Pedro Passos Coelho told parliament without giving further details.

He repeatedly refused to answer questions from opposition politicians about whether he intends to push ahead with plans to cut 4 billion euros (3.4 billion pounds) in spending in 2013-14. Local media have reported that the government may seek more time to make those cuts.

Antonio Saraiva, head of the Portuguese Industry Confederation - the biggest employers' group - said on Tuesday it was "unthinkable and impossible" to cut state spending by 4 billion euros in two years.

"As long as the evaluations are ongoing, the government will make no public announcements," Passos Coelho said, adding that Portugal has to continue down its austerity path. "We are at a stage during which we cannot question the essential direction we adopted to consolidate our public accounts."

'NOTABLE EFFORT'

In Strasbourg, European Commission President Jose Manuel Barroso meanwhile confirmed the EU executive body would propose giving Portugal an extra year to meet its budget deficit goals, since any shortfalls in meeting the targets would be mostly due to a worsening external environment amid a recession in Europe.

"Portugal has been making a notable effort. For that reason, I can reiterate that the Commission will propose to the European Council the extension," Barroso said in remarks broadcast by RTP television.

He also played down the length of the troika review, telling reporters in Strasbourg that "we knew from the very start that the seventh evaluation would take some time".

Marques Guedes declined to comment on the details of the review negotiations or when they would end. He was speaking after a weekly cabinet meeting, where he said the review had not been discussed.

The sharp downturn in the Portuguese economy has prompted loud calls by business and the opposition for an easing of the austerity drive and the government has said it would be unable to meet tough budget goals.

Sources close to the review have said all three of the lenders, acknowledging Lisbon's austerity efforts so far and the impact of Europe's recession on the country, were ready to give the country an extra year, until 2015, to cut its budget deficit below 3 percent of gross domestic product.

(Additional reporting By Filipe Alves, Filipa Lima and Andrei Khalip; Editing by Michael Roddy; Editing by John Stonestreet)

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