Portugal to make $6.3bn in cuts to avoid another bailout

PanARMENIAN.Net - Portugal plans to avoid the threat of needing another bailout by making another 4.8 billion euros ($6.3 billion) in cuts over the next three years, with measures including raising the retirement age by one year to 66 and laying off around 30,000 government workers, the Prime Minister said Friday, May 3, according to The Associated Press.

Pedro Passos Coelho announced the proposals in a prime-time televised address to the nation. Portugal received a 78 billion euro rescue in 2011 after overspending, heavy debts and weak growth left it close to bankruptcy amid the eurozone's financial crisis.

Passos Coelho warned the country couldn't expect the rest of Europe to throw it another financial lifeline and said Portugal must honor the terms of the three-year bailout agreement, which demands deep cuts in spending.

"The idea that Europe will always come to our aid is wrong," Passos Coelho said. He said Portugal must show "our European partners that they have no reason to doubt our commitment" to repairing the country's public finances.

Failing to abide by the 2011 bailout agreement would be "disastrous" for Portugal's international credibility and would entail leaving the euro, which he said would be "catastrophic" for the country.

Passos Coelho said he wants to give a full state pension to workers only when they reach 66; negotiate early retirement deals with government workers to get his target of 30,000 fewer staff; and increase the working hours of government employees to 40 hours from 35, the same as the private sector.

Many people blame the government's spending cuts and tax hikes for a recession that is forecast to continue for a third straight year in 2013. Unemployment is at 17.5 percent, and the government predicts it will reach 18.5 percent next year.