Portugal Warns Citizens of Austerity Measures
Portugal's prime minister warned his country Thursday to prepare for deepening hardship next year as the government expands its austerity plan of pay cuts and tax increases to slash the national debt.
Portugal is one of three eurozone countries that have needed financial rescue because of an unsustainable debt load. It took a euro78 billion ($108 billion) bailout in May, but Europe's debt crisis has endured as ailing countries like Portugal struggle to ease their debt burden and find sources of economic growth.
Despite a series of tax hikes and pay and welfare cuts, Portugal is coming up short on debt reduction targets it agreed in return for the bailout.
Prime Minister Pedro Passos Coelho said that 70 percent of the permitted budget deficit this year was used up by the end of June.
"We are living through a national emergency," Passos Coelho said in a televised address.
"We have to do more, a lot more, than we expected" to bring down the deficit, he said.
The deficit was 8.3 percent in the first half of the year - down from 9.6 percent last year but way off this year's goal of 5.9 percent. Portugal must meet the target to qualify for the bailout funds.
The government is transferring the pension funds of private banks to the state treasury to help lower this year's deficit.