IMF: Bailed-out Portugal Needs Extra Debt Effort
An ensuing drop in tax revenue has compelled the coalition government to step up austerity measures to shore up its finances, including what the finance minister calls an "enormous" increase in income taxes next year that will cost many workers the equivalent of a month's pay.
That has brought a broad outcry from opposition political parties and from trade unions, who have called a general strike next month. Recent demonstrations have drawn tens of thousands of people, though Portugal has not so far witnessed the street violence seen in Greece.
Portugal's economic reforms will take time to pay off and additional measures will be needed, the IMF said. With public debt set to peak at 124 percent of gross domestic product in 2014, Portugal's "room for maneuver has diminished."
Aware of the difficulties, the bailout lenders recently eased Portugal's deficit targets, to 5 percent this year and 4.5 percent next."While the program's core objectives remain within reach, the buffers in the program to cope with further adverse shocks have narrowed," the report said. "The program also remains short of policies that offer any upsides to near-term employment and competitiveness prospects."
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass Plus 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV