LISBON, March 11 Portugal international lenders
will give the bailed-out country an extra year, until 2015, to
cut its budget deficit below 3 percent of gross domestic
product, sources close to the latest lenders' review said.
The concession acknowledges the impact of Europe's recession
on the country, and the efforts Lisbon has made to hit the
targets set under its 78 billion euro rescue, they said.
"There's a great adjustment effort, which is being
recognised. There is a consensus (among the lenders) that the
external setting has worsened and that Portugal needs another
year to lower the deficit below three percent," one source said.
Inspectors from the "troika" of lenders - the European
Commission, European Central Bank and International Monetary
Fund - are in Lisbon wrapping up their latest quarterly review
of the economy and bailout adjustments this week.
They can recommend an easing of targets to the three lending
"This (3 percent) goal will be reached in 2015. This year's
recession will be higher, at around 2 percent, which makes
budget execution more difficult," the source in Lisbon added.
The finance ministry declined to comment.
The government had said it might need an extra year to
narrow the deficit due to the worsening economic situation. Last
month it downgraded its 2013 forecast to a GDP contraction of
1.9 percent from 1 percent.
The lenders already eased Portugal's deficit goals last year
after tax revenues fell short, undermined by a slump in consumer
demand and a rise in unemployment.
Lisbon's current targets are to cut the deficit to 4.5
percent of GDP this year from last year's 5 percent and then to
2.5 percent in 2014.
"The recession in Europe is an important piece of data and
that is why the troika is flexible," another source said, adding
that Portugal's external accounts were being adjusted more
quickly than envisaged under the bailout.