UPDATE 1-Portugal PM: public finances "urgent imperative"

* New council to monitor public finances

* Govt policy to be in line with bailout

(Updates with quotes, background)

LISBON, June 21 (Reuters) - Portugal's Prime Minister Pedro Passos Coelho said on Tuesday that his new government considers that bringing the country's public finances under control is an "urgent imperative".

"The goal of returning to a sustainable path in public finances is an urgent imperative to face our short-term problems," Passos Coelho said after being sworn in as prime minister on Tuesday.

He said in his inaugural speech that Portugal faces urgent challenges as his government prepares to introduce austerity measures and economic reforms under a 78-billion-euro bailout plan. Passo Coelho won a June 5 general election.

A new public finance council, to monitor budget executive, should help bring confidence to cutting the budget deficit, he said.

"Our priorities are clear; stabilizing public finances, helping the most needy and make the economy grow and create employment," he said.

He said government objectives would be carried out "in conformity" with the bailout agreement signed with the European Union and IMF. Under the deal the country has to cut the budget deficit to 5.9 percent of gross domestic product this year from 9.1 percent in 2010.

The new finance minister, Vitor Gaspar, was due to meet with European Union and IMF officials on Tuesday.

Passos Coelho's centre-right Social Democrats had already committed themselves to the terms of the bailout before the election, which the previous government of Socialist Jose Socrates was forced to seek in April after borrowing rates soared.

The Social Democrats will govern in a majority, coalition with the smaller, rightist CDS party.

The bailout terms include higher taxes, deep spending cuts and reforms of Portugal's labour and legal systems. They are expected to lead the economy to contract by 2 percent both this year and next.

(Reporting by Sergio Goncalves and Axel Bugge; Editing by Ron Askew)