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EU’s Rehn says Portugal on track with bailout plan

Portugal is on track to meet the terms of its 78-billion-euro bailout and must stick to fiscal goals agreed under the plan, European Union Economic and Monetary Affairs Commissioner Ollie Rehn said on Wednesday.

“Portugal is on track to reverse its fiscal situation, to regain confidence in its economy from international partners and from the market and to set the foundation for more sustainable growth,” Rehn told reporters during a visit to Lisbon.
Rehn met with Prime Minister Pedro Passos Coelho and Finance Minister Vitor Gaspar on the first day of a two-day visit to Portugal.
Rehn made clear Portugal must stick to tough budget deficit goals despite a deep recession due to austerity.
Neighbouring Spain has said it will relax budget goals this year, defying the European Commission.
“It is now essential that this solid performance continues in order to reinforce confidence further and in particular that Portugal sticks to its (deficit) target of 4.5 percent this year in order to achieve the 3 percent target next year,” he said.
Portugal only met last year’s budget deficit goal of 5.9 percent of gross domestic product thanks to a one-off transfer of banks’ pension assets to the state. Some economists say Portugal may struggle to meet this year’s goal of 4.5 percent, especially if the recession deepens further.
Rehn said Portugal was different from Greece, which was forced to seek a second, 130-billion-euro bailout and to restructure its debt.
“The Portuguese situation is very different from the Greece situation for several reasons,” he said when asked if he thinks Portugal will need more bailout money.
“First of all the debt burden is not at all in the same scale. Second, there is strong and broad political consensus (in Portugal) backing the programme from the start,” he said.
Portugal’s total debts reached just over 100 percent of GDP last year. Greece’s was at 160 percent before its debt restructuring.
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