The Portuguese government said the third review of the nation’s international aid program was completed “successfully,” allowing the country to receive the next rescue payment.
“The adjustment we are carrying out is unprecedented in Portugal,” Finance Minister Vitor Gaspar said at a press conference in Lisbon today.
Gaspar said the government forecasts gross domestic product will drop 3.3 percent this year, the same as forecast by the European Commission. The country’s economic growth has averaged less than 1 percent a year for the past decade, placing it among Europe’s weakest performers.
Prime Minister Pedro Passos Coelho is cutting spending and raising taxes to meet the terms of a 78 billion-euro ($105 billion) aid plan from the European Union and the International Monetary Fund. As the country’s borrowing costs surged, Portugal followed Greece and Ireland in April in seeking a bailout and now aims to return to bond markets in 2013.
Passos Coelho on Feb. 17 reaffirmed that his government will not ask for more time or more money as it implements the financial aid program.
Portugal narrowed its budget deficit to about 4 percent of GDP in 2011 following the transfer of banks’ pension funds to the state. The government expects the shortfall will reach 4.5 percent in 2012 and the EU ceiling of 3 percent in 2013, after hitting 9.8 percent in 2010.
Portuguese government debt is projected to “stabilize” at 112 percent of GDP in 2013 after reaching 111 percent in 2012 and 101.6 percent last year, the commission forecast in November. Debt was 93.3 percent of GDP in 2010.