Portugal govt sticks to bailout goals despite court ruling

LISBON, April 7 Sun Apr 7, 2013 2:00pm EDT

LISBON, April 7 (Reuters) - Portugal's government will cut spending to compensate for the constitutional court's rejection of key austerity measures from this year's budget in order to meet its bailout targets, Prime Minister Pedro Passos Coelho said on Sunday.

Passos Coelho said in a televised address the rejection posed "serious obstacles and risks" to the budget execution this year and next, but reaffirmed his commitment to the fiscal and economic adjustment programme under an EU/IMF bailout.

"We will not hesitate ... the government is committed to all the objectives of the programme," he said.

The constitutional court on Friday rejected four out of nine contested austerity measures in this year's budget in a ruling that deals a heavy blow to government finances. Still, analysts say the rejection should not provoke a governability crisis and expect replacement measures to be found with the European Union and International Monetary Fund.

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