Brussels, 10/01/2012 (Agence Europe) - On Thursday 10 January 2013, the European Commission gave details of demands being made of Portugal under its €78 billion bailout plan following the publication on 9 January of an International Monetary Fund report stating that Portugal must make spending cuts of €4 billion in 2013 and 2014. The Commission says that this figure was listed in the country's targets set during the most recent fact-finding mission by the country's lenders (the troika - the European Commission, IMF and European Cenral Bank) in November.
In response to questions, Simon O'Connor, a spokesman for Euro Commissioner Olli Rehn, said that the IMF report laid down savings, inter alia in the public sector, of some €4 billion, but the exact scale of the cuts and their timing remained to be seen and would be discussed at the upcoming inspection, scheduled for mid-February. He said, to, that, in response to criticism from a number of Portguese trade unions about the reduction in redunancy pay to 12 days' pay per year of employment, as opposed to the 18 days recommended by the trade unions, was also included in the conclusions of the November fact-finding mission and had been “agreed” with the Portuguese government. The Commission says that the reform of redundancy pay is crucial for ensuring that Portugal regains competitiveness and creates jobs, said O'Connor, adding that the Commission hoped to see a constructive outcome to the current talks between the Portuguese government and social partners.
On Wednesday, the IMF recommended that Portugal slim down its civil service and cut civil servants' pay and pensions in order to help make these €4 billion savings, AFP reports. It recommends cutting the 700,000 or so officials by a fifth and cutting civil servants' pay by 7%, suggesting an increase in the retirement age and making it possible for the government to cut pensions if required by the budget. These measures would come on top of the austerity measures already introduced, like the tax rises in the 2013 budget that the Portuguese president, Anibal Cavaco Silva, is challenging at the country's constitutional court on the grounds of unfairness (see EUROPE 10758). (SP/transl.fl)