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Also, the austerity program is a demand of foreign creditors
-- Portugal's EU partners and the International Monetary Fund -- who lent it 78 billion euros ($102 billion) in a financial rescue two years ago. If Portugal doesn't stick with the planned cuts the creditors can stop disbursements of the bailout funds, leaving the country at risk of bankruptcy. Nevertheless, the outlook for Portugal is grim. The jobless rate, currently at a record 17.8 percent, is forecast to hit 18.5 percent next year. The bailout creditors predicting a contraction of 2.3 percent this year after the Portuguese economy shrank 3.2 percent in 2012. The budget deficit stood at 6.4 percent of annual GDP in 2012
-- higher than the 5 percent target for that year though much lower than the 10.1 percent recorded in 2010. Already, the government has raised sales tax to 23 percent from 13 percent, while income tax hikes have costing many middle-class workers more than a month's pay. A European Commission report published Wednesday forecast further declines in household income this year and next. Unions are also angered by the government's latest plans, which include increasing the working time of state employees to 40 hours a week from 35; increasing their monthly pension deductions while lowering their pension entitlements; and laying off some 50,000 government workers out of the total of about 583,000.
The crunch won't stop there, however. The government, which has to find another 3.4 billion euros of savings in 2014, is due to present next month details of a deep and broad reform of how the state is run. The proposal is expected to order a further streamlining of state services and will likely fuel more protests.
[Associated
Press;
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