Brussels, 15/03/2013 (Agence Europe) - Portugal has managed to get its international lenders to give it an extra year, until 2015, to reduce its public deficit to 3%, announced Portuguese Finance Minister Vitor Gaspar in Lisbon in Friday after the seventh fact-finding mission by the troika of lenders, the European Commission, European Central Bank and International Monetary Fund. The experts said that Portugal is meeting its pledges under the €78 billion financial bailout agreed to in May 2011. Despite worse recession than expected in 2012 (of 3.2% of GDP), the experts say the economy will pick up at the end of the year and return to growth (0.6%) in 2014. The decision to ease the budget targets was taken in the light of the deteriorating economic climate, with a contraction of 2.3% forecast for GDP this year, said Gaspar, who had previously been expecting the economy to shrink by 1%.
The targets were already eased in September 2012 from the previous 4.5% of GDP in 2013, 2.5% in 2014 and 2% in 2015 to 5.5% of GDP in 2013 (the latest target), 4% in 2014 and 2.5% in 2015. In 2012, the country's deficit reached 4.9% of GDP.
Unemployment will continue to rise from 18.2% in 2013 to 18.5$ in 2014, said Gaspar. Quizzed about the new forecasts, the president of the European Commission, José Manuel Barroso, said in Brussels that youth unemployment was a huge concern and needed to be addressed from all angles, including use of the EU structural funds. Barroso said he was pleased the Portuguese aid programme was being properly implemented and had given investors new confidence.
The latest positive assessment from the fact-finders will lead to the disbursement of €2 billion of aid for Portugal shortly. Gaspar said that with this two billion, Portugual will have covered 90% of its borrowing requirements for this year. (SP/transl.fl)