Portugal Looks To Meet Its Budget-Deficit Targets

The Portuguese government will continue cutting spending to try to meet budget-deficit targets. This includes cutting spending in ministries and lowering the number of public workers. As explained in the Wall Street Journal,

“Portugal will exit a three-year, €78 billion ($108 billion) bailout program next month, but lenders—the International Monetary Fund and the European Union—want to make sure the country won’t slip back into overspending. They have imposed a deficit target of 2.5% gross domestic product for 2015, down from 4% this year. Deficit was close to 10% of GDP before the bailout program started. “

Since the second quarter of 2013, Portugal’s GDP and unemployment figures have improved, allowing the government to meet its targets from last year. Fortunately, the improved economic performance means that the government doesn’t need to cut spending as drastically as they originally thought. Rather than cutting spending by more than €2 billion next year, they now believe they need to cut it by €1.4 billion.

As explained by the Wall Street Journal,

“Finance Minister Maria Luís Albuquerque told reporters in a news conference that cuts in the number of public workers will continue to be made through retirement and mutual agreements. In addition, the government could consider imposing taxes on products that are harmful to health.

The government won’t increase income taxes and it won’t make further cuts on salaries and pensions, she added. “

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