Brussels, 08/04/2013 (Agence Europe) - Portugal will respect its commitments and the aims of its €78 billion financial aid package decided upon in May 2011, promised the country's PM, Pedro Passos Coelho, at the weekend, addressing his comments to Portugal's troika of lenders (European Commission, European Central Bank and the International Monetary Fund) following a ruling by the country's constitutional court on Friday that some of the austerity measures in the 2013 budget are illegal. The 2013 budget includes a tax rise across the board, the removal of the fourteenth month bonus from civil servants and pensions and reductions in unemployment and sickness benefit. Portugal says the ruling will lead to lost income to the state of between €900 million and €1.3 billion, and it will need to introduce new provisions to meet its target of cutting the budget deficit to 5.5% in 2013.
The Portuguese prime minister announced new budget cuts on Sunday rather than new tax rises. The greatest cuts will be made in healthcare, social security and education, he warned, but the country's inhabitants are already feeling severely under pressure. Passos Coelho said the government would respect all the aims of the aid programme and the country's domestic and foreign commitments, speaking in a formal address to the nation. He ruled out the need for extra aid, saying he would do everything needed to avoid it.
His assurances were welcomed by the European Commission, which called on the country on Sunday to meet its obligations. In a press release, the Commission warned that any failure to meet the aid plan targets or any renegotiation of them would wipe out the efforts already made by the people of Portugal by making their problems last long.
Now that the original austerity measures have been rejected, Portugal will need to draw up new ones. The troika will then assess the planned measures, said Simon O'Connor, a spokesperson for Euro Commissioner Olli Rehn, on Monday and if it approves of the plans, it will arrange the disbursement of a new batch of aid, some €2 billion. Portuguese Finance Minister Vitor Gaspar may discuss the new measures on Friday and Saturday at the meeting of EU economy and finance ministers in Dublin, but details of the measures will themselves depend on whether the eurozone agrees to grant the country more time to pay off its loans. Portugal wants the repayment deadline for loans to be extended to beyond 2022, an idea backed by the European Commission. Finance ministers will decide on Friday whether to go along with the request. (SP/transl.fl)