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IMF warns Portugal deficit may rise to 8.6 pct/GDP

LISBON, Jan 20 (Reuters) - The International Monetary Fund warned on Wednesday Portugal’s fiscal deficit may rise further to 8.6 percent of gross domestic product this year from 2009’s estimated 8 percent if no new measures are implemented.

It said current government policies were not enough to reduce budget gap to below euro zone ceiling of 3 percent by 2013, which means that “fiscal consolidation is critical to prevent further deterioration and preserve hard-won credibility”.

The IMF added in its staff report after a mission to Portugal in late 2009 that without new measures, the country will only manage to cut its budget deficit to between 5 and 6 percent of GDP by the 2013 deadline. Government debt would rise by then to around 100 percent of GDP from last year’s estimated 76 percent.

The government is to present a draft 2010 budget, delayed by last year’s elections, next Tuesday. (Reporting by Andrei Khalip)

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