• 18 OCT 2011
Oct. 18 (Bloomberg) -- European Union Economic and Monetary Affairs Commissioner Olli Rehn said Portugal faces “significant challenges” as it works to narrow its budget deficit and meet the terms of an EU-led rescue package.
Portugal faces “risks” in meeting its 2011 deficit target and will need to redouble efforts to adopt an “ambitious but necessary” 2012 budget, Rehn said in a speech to a Lisbon conference that he delivered in a video message.
The Portuguese Finance Ministry said yesterday that the economy may contract 2.8 percent next year, more than previously forecast. This may complicate its aim to trim the deficit from 9.8 percent of GDP in 2010 to 5.9 percent this year, 4.5 percent in 2012, and to the EU ceiling of 3 percent in 2013.
Portugal agreed to deficit targets in May when it agreed to a 78 billion-euro ($107 billion) aid plan with the EU and the International Monetary Fund.
Portugal’s program has received across-the-board support. At the same time, its ability to meet the 2011 targets is now in question, Rehn said.
“This is unfortunate, and underscores failures in budget planning and execution, which need to be fixed,” Rehn said, according to text of his remarks. “Significant challenges lie ahead, which will be assessed in the upcoming second review in September.”
The Portuguese government has proposed “courageous” measures that allow the country to move past its 2011 difficulties, Rehn said, adding that EU officials will review the details of the plan in the next few days.
Read entire article