(4 Jun 2012) Portugal's foreign bailout creditors are providing another batch of the country's 78 (b) billion euro (96 (b) billion US dollar) rescue package after concluding the government is abiding by the terms of the loan, the finance minister and international lenders said on Monday.
However, the impact of austerity measures demanded by the bailout agreement and Portugal's continuing economic frailty have forced the government to provide gloomier forecasts for debt and growth.
Public debt will rise to 118 per cent of gross domestic product in 2013, Finance Minister Vitor Gaspar predicted.
That is up from the 115 per cent the government had previously forecast.
Gaspar said the upward revision is due to lower expectations for GDP growth next year, which is now expected to reach 0.2 percent instead of 0.6 percent.
Portugal is already enduring its third recession in four years, with the government expecting a 3.1 per cent contraction in 2012.
Unemployment, meanwhile, has increased to a record 15.2 percent, and the government expects it to reach 16 percent next year.
Gaspar said high unemployment will also bring a drain on welfare resources, while lower domestic consumption reduces tax revenue.
Portugal needed a financial lifeline a year ago after a decade of weak growth and rising debt spooked investors, who began charging it unaffordable rates for credit.
It followed other eurozone countries Greece and Ireland in needing a bailout.
The country has stuck with its agreed programme of austerity measures, featuring pay cuts and tax rises, and broad economic reforms, despite the recession and trade union opposition to a loss of labour rights, including a new law which makes it easier and cheaper to hire and fire workers.
"We have made important steps and we will continue to work to consolidate financial stability," Gaspar told reporters.
He said the budget deficit is on track to stand at 4.5 percent, as planned, this year. That is down from 5.6 percent last year.
The government is aiming for a deficit of 3 percent next year. The deficit was 9.8 percent in 2010.
Gaspar said Portugal will receive 4.1 (b) billion euros (around 5.1 (b) billion US dollars) after passing its fourth quarterly test by foreign inspectors.
The country has so far received about 75 percent of the promised bailout funds.
It has to pass the inspectors' tests to get the money.
The bailout creditors - the European Central Bank, European Commission and International Monetary Fund - said Portugal "is making good progress" on implementing the bailout programme.
Some analysts predict Portugal will need more time and money to help it through the eurozone's ongoing sovereign debt crisis and a possible global economic downturn. The government insists it won't need any more aid.
Gaspar said the government intends to raise revenue by privatising flag carrier TAP Air Portugal and airport management company ANA this year, though the sale of rail freight company CP Carga has been postponed to 2013.
Find out more about AP Archive: [ Ссылка ]
Twitter: [ Ссылка ]
Facebook: [ Ссылка ]
Instagram: [ Ссылка ]
You can license this story through AP Archive: [ Ссылка ]
