Portugal PM: no need to change constitution for bailout drive

LISBON, Sept 1 Sun Sep 1, 2013 12:29pm EDT

LISBON, Sept 1 (Reuters) - Portugal's constitutional court is complicating Lisbon's already fraught attempts to meet its EU/IMF bailout goals but Prime Minister Pedro Passos Coelho said on Sunday he had no intention of limiting its power by changing the constitution.

The prime minister also pledged to revise labour reforms which the court rejected last week.

The court's third rejection of government austerity plans in 13 months has raised concerns about Lisbon's ability to make structural spending cuts sought by lenders without constitutional changes which could delay reforms and lead to a new bailout.

"We do not need to revise the constitution to fulfil the bailout programme and implement these measures, what is needed is common sense," Passos Coelho told a meeting of his Social Democratic Party.

"As for that measure, we will present an alternative very briefly ... It's not the Constitutional Court that governs."

The parliament-approved bill would have allowed the firing of public sector employees after a one-year re-qualification period.

Worth just 170 million euros in net spending cuts next year, it was nevertheless an important element of a 4.7 billion euro overall spending reform because of its potential longer-term structural impact.

Passos Coelho said that having to come up with patch-up solutions had a cost for the country's credibility and that the court's rejections, especially if more were to come, could complicate Lisbon's position in talks with its European Union and International Monetary Fund lenders.

The next bailout review begins this month.

"Today I already cannot tell them that there won't be problems with these measures. And if they ask how to replace them, I'll have more difficulties in answering. But I will answer and I will do what the prime minister is supposed to do," he said.

Portugal's current bailout programme ends in mid-2014, but many analysts expect the indebted euro zone country to need some sort of further support programme.

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