Portugal's budget gap bigger
Source: Agencies |
April 25, 2011, Monday
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Print Edition
Print Edition
PORTUGAL has for a second time revised upward the debt-stressed country's budget deficit last year, releasing official figures that said it was 9.1 percent of gross domestic product instead of the previously announced 8.6 percent.
The National Statistics Institute said in a statement dated Saturday it had sent the revision to Eurostat, the European Union's statistics office.
The revised deficit figures are another setback for Portugal as its government negotiates the terms of a badly needed bailout to try to avoid bankruptcy.
Portugal requested the bailout this month as it struggled with high debt after years of poor economic growth and amid forecasts of faltering output.
Delegations from the European Commission, the European Central Bank and the IMF were in Lisbon last week to start negotiations on the terms of the rescue.
The bailout could amount to 80 billion euros (US$116.7 billion) and the parties must fix the final amount and determine the interest rate.
In late March, the 2010 deficit was recalculated at 8.6 percent after the institute was required by the EU to adopt Eurostat auditing rules which forced the integration of losses not properly accounted for previously.
The deficit figure is far above the 17-nation eurozone's limit of 3 percent. Portugal is one of the bloc's smaller members, accounting for less than 2 percent of its overall gross domestic product.
The revised deficit misses by a long way the 7.3 percent target set by Prime Minister Jose Socrates' government for 2010.
Analysts expect austerity plans featuring tax hikes and pay cuts to push Portugal into recession this year, reducing tax revenue and placing greater stress on a budget already fast draining through the payment of high interest rates on borrowings.
A further budgetary burden is likely to develop if the jobless rate rises over 11 percent, placing greater pressure on the treasury via an increase in welfare payments.
The National Statistics Institute said in a statement dated Saturday it had sent the revision to Eurostat, the European Union's statistics office.
The revised deficit figures are another setback for Portugal as its government negotiates the terms of a badly needed bailout to try to avoid bankruptcy.
Portugal requested the bailout this month as it struggled with high debt after years of poor economic growth and amid forecasts of faltering output.
Delegations from the European Commission, the European Central Bank and the IMF were in Lisbon last week to start negotiations on the terms of the rescue.
The bailout could amount to 80 billion euros (US$116.7 billion) and the parties must fix the final amount and determine the interest rate.
In late March, the 2010 deficit was recalculated at 8.6 percent after the institute was required by the EU to adopt Eurostat auditing rules which forced the integration of losses not properly accounted for previously.
The deficit figure is far above the 17-nation eurozone's limit of 3 percent. Portugal is one of the bloc's smaller members, accounting for less than 2 percent of its overall gross domestic product.
The revised deficit misses by a long way the 7.3 percent target set by Prime Minister Jose Socrates' government for 2010.
Analysts expect austerity plans featuring tax hikes and pay cuts to push Portugal into recession this year, reducing tax revenue and placing greater stress on a budget already fast draining through the payment of high interest rates on borrowings.
A further budgetary burden is likely to develop if the jobless rate rises over 11 percent, placing greater pressure on the treasury via an increase in welfare payments.
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