Dec. 11 (Bloomberg) -- The Portuguese government is ready to implement additional measures in 2013 if there are slippages in meeting budget targets, the European Commission said.
Fiscal consolidation efforts are “in line” with the budget-deficit targets of 5 percent and 4.5 percent of gross domestic product for 2012 and 2013, respectively, the commission said in a report obtained by Bloomberg News about the sixth review of the aid program it conducted together with the International Monetary Fund and the European Central Bank. The program is “broadly on track,” it said.
“In view of the risks associated with the strongly revenue-based adjustment, the authorities are preparing contingency measures, predominantly on the expenditure side, amounting to 0.5 percent of GDP,” the Brussels-based commission said about the 2013 budget. “Going forward, the mission supported the authorities’ intention to re-balance the adjustment effort toward permanent reductions in expenditure.”
A “large” share of these contingency measures consists of additional reductions in the wage bill and increased efficiency in the functioning of public administration, according to the 46-page report.
Portugal is also “optimizing” cash reserves, said the commission, the European Union’s executive arm. “As a consequence, the likelihood of Portugal being able to cover its financing needs in 2013 has strongly improved.”