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Portugal plans new spending cuts to win more time on loans
April 12, 2013 / 1:07 PM / 5 years ago

Portugal plans new spending cuts to win more time on loans

LISBON (Reuters) - Portugal has presented to its European partners spending cut plans after a court rejected some of its austerity measures, and it hopes its plans will be enough to win it more time to repay its bailout debts, the prime minister said.

Portugal's Prime Minister Pedro Passos Coelho speaks to journalists during a news conference accompanied of his Finland counterpart Jyrki Katainen (not pictured) at the Sao Bento palace in Lisbon April 12, 2013. REUTERS/Rafael Marchante

Portugal’s constitutional court last week rejected up to 1.3 billion euros in this year’s government austerity measures, forcing Lisbon to put together alternative plans for spending cuts to honour the terms of its 78-billion euro bailout deal.

“It’s premature to say that the decision has been made (on maturities), but I am confident the solution will be favourable,” Pedro Passos Coelho told reporters on Friday.

He said Portugal will implement new spending cuts worth 600 million euros at all ministries and bring forward about the same amount in reductions envisaged for 2014 in the areas of social security, health, education and public companies.

Jeroen Dijsselbloem, the chairman of euro zone finance ministers’ group, said earlier the group would like Portugal to get seven more years to repay loans it received from the European Union, but needed to assess Lisbon’s planned steps to fix this year’s budget.

Eurogroup and EU ministers hope to agree later on Friday in Dublin on extending the loan maturities for Ireland and Portugal. Lisbon has called the current repayment schedule “impossible”.

Passos Coelho said tentative cuts had been outlined.

“We have already presented to our partners some possibilities that will require further work next week when the troika visits Portugal,” he said. “We have a (bailout) agreement with our partners and we need to stick to it.”

Representatives of Lisbon’s ‘troika’ of lenders from the European Commission, European Central Bank and the International Monetary Fund are due to work with the government on the extraordinary spending cuts this year and on wider cuts promised through 2015 to meet Lisbon’s deficit-reduction goals.

Reporting By Andrei Khalip and Daniel Alvarenga

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