Portugal opposition chief demands renegotiation of bailout

Portugal's Socialist Party secretary-general Antonio Jose Seguro speaks during an interview with Reuters in Lisbon May 24, 2012.

LISBON (Reuters) - Portugal should renegotiate the terms of its 78-billion-euro international bailout because its program of budget austerity has failed, the head of the main center-left opposition said on Tuesday.

The Socialists, who agreed Portugal's original deal with international creditors in 2011, have been calling for some time for an easing of cuts which have driven the euro zone member into recession, but had stopped short of demanding new talks on the terms of the bailout.

"We need more time and a delay of interest payments," Socialist head Antonio Jose Seguro told journalists. "There cannot be more austerity, there has to be a strategy of growth."

He was speaking a day after Portugal's creditors started their seventh review of the bailout during which the government is expected to request an easing of tough budget goals.

Calls for less austerity have risen sharply since the economy took a turn for the worse in the fourth quarter of last year. That prompted the European Commission to downgrade the outlook for this year to a slump of 1.9 percent from a previous forecast of a 1 percent contraction.

"We are not heading in the right direction," said Seguro. "The prime minister has his back to the country."

The government launched the largest tax hikes in living memory this year to boost revenues, which is likely to sharply dent spending by the Portuguese.

The economy is mired in its worst recession since the 1970s and unemployment is at record highs at just under 17 percent.

(Reporting By Axel Bugge and Daniel Alvarenga; editing by Patrick Graham)