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March 8, 2010

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Portugal eyes spending cuts in budget

PORTUGAL'S long-term budget austerity plan encompasses spending cuts via reducing tax breaks and containing public sector wages, but entails no Greece-style wage cuts or tax hikes, local media said yesterday.

The minority Socialist government on Saturday approved the guidelines of the plan, to be presented to Brussels later this month, but postponed the release of details, sought by markets demanding commitment to deficit and debt cuts, to this week.

Officials have said the program combines public spending cuts with fiscal stability, but would not elaborate.

Markets have been jittery about Lisbon's large budget deficit, which spiked to 9.3 percent of gross domestic product last year, since Greece's fiscal crisis erupted.

There are concerns on sharply increasing debt servicing costs because of the impact of the deep economic slowdown, although both Portugal's deficit and debt are much lower than Greece's.


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