Portuguese PM says to futher cut public spending to meet bailout requirement
Portuguese Prime Minister Pedro Passos Coelho said Sunday that his government will not increase taxes but will further reduce public spending to meet bailout requirement.
In a 20-minute statement, Passos Coelho said that Friday's Constitutional Court has "compromised Portugal's return to the markets and its ability to renegotiate interest on its loans as well as Portugal's image abroad, something that was built up successfully over the past 22 months."
The prime minister assured, "The government will not accept any further increase in taxes, which seems to be the solution that the Constitutional Court favors."
Tax increases "would severely jeopardize our chances of a timely recovery of the economy and job creation," he added.
Two days after the Constitutional Court ruled against cutting public sector pay in the 2013 state budget, the head of the Portuguese government stressed that he will not raise taxes to offset the Constitutional Court ruling but he will accelerate the process of reducing expenditure.
"We are left with the alternative of accelerating some aspects in public spending. To compensate for this imbalance, we have to put into practice this year measures to reduce spending in social security, health, education and public companies," he said, revealing that over the coming days, the ministries will begin to shave off operating costs.
"The country can not expect Europe to solve their problems," said the prime minister, who made assurances that he will "respect and comply with the decisions of the Constitutional Court but disagrees with the interpretation of the law along with many other institutionalists."
"The court decision puts the Portuguese negotiating position in fragile footing with Europe," he said, while arguing that in "exceptional times, extraordinary action is needed, something that was not understood by the Constitutional Court."
The court decision "runs against the objectives of the government and will have consequences for the country, at the same time as we have serious obstacles to hurdle in 2013."
On Sunday, Portugal's main opposition Socialist Party leader Antonio Jose Seguro continued to call for early elections.
"The only solution is to call for new elections," the Socialist leader reiterated in an interview with broadcaster SIC Noticias.
Portugal is implementing harsh austerity measures in return for the bailout of 78 billion euros (about 101 billion U.S. dollars) from the troika comprising the European Union, the International Monetary Fund and the European Central Bank. The government's move has triggered widespread protests across the country in recent months.
According to official figures, Portuguese economy will contract by 2.3 percent this year and its unemployment rate is expected to increase by 18.2 percent.