Brussels, 06/03/2012 (Agence Europe) - Portugal will not be making any changes to its deficit reduction targets and will therefore not be following Spain's example, said Portuguese Prime Minister Pedro Passos Coehlo on Monday 5 March. Portugal has been in receipt of international aid since May 2011 and is expected to see its economy shrink faster than expected this year, but the prime minister says it will meet its target of reducing its deficit to 4.5% of GDP in 2012, bringing it below the 3% cut-off point in 2013. Last week, in an assessment of the Portuguese aid and austerity programme, the troika of international lenders (the European Commission, the ECB and the IMF) said the deficit reduction target was still possible (see EUROPE 10536).
Spanish Prime Minister Mariano Rajoy has said that he wants to relax his country's deficit reduction target for 2012 to 5.8% of GDP (rather than 4.4%), with the aim of reducing it, as planned, to below the 3% cut-off point next year.
Passos Coehlo says Spain can afford to do this because it is in a different situation from Portugal, with greater room for manœuvre to achieve its targets in 2013. Portugal has to meet the requirements of the austerity programme introduced in return for the €78 billion aid package, a programme that will last until 2014 and does not allow objectives to be missed, he explained.
The Portuguese prime minister says that Portugal will not be following the example of Greece and is instead taking advantage of positive outcomes to avoid having to write down its debt. Passos Coehlo added that Portugal has already been promised continuing support from its lenders if conditions outside Portugal deteriorate and make it more difficult for the country to meet its targets, but he is not planning on making use of this option. (SP/transl.fl)