Portugal Heading for ‘Shock’ Year as Crisis Deepens: Euro Credit

With an economy struggling in a recession, Portuguese Prime Minister Pedro Passos Coelho is fighting to avoid the market mayhem that toppled the Italian government last week.

Coelho, whose Social Democratic Party ousted the Socialist government in June elections, is meeting targets set by the European Union and International Monetary Fund in the 78 billion-euro ($105 billion) bailout program, and he plans to implement next year what he calls the “most difficult” budget in memory. He’s slashing state workers’ salaries and avoiding further one-off income-tax surcharges to fill a financing hole.