March 15, 2013 / 9:47 AM / 5 years ago

Portugal gets more time on bailout goals as economy tanks

LISBON, March 15 (Reuters) - Portugal’s creditors have eased fiscal goals and allowed more time for deeply unpopular spending cuts under a bailout after the economy’s outlook worsened further, Finance Minister Vitor Gaspar said on Friday.

He told a news conference the country had passed the seventh bailout review by inspectors from the ‘troika’ - the European Commission, IMF and European Central Bank - which would qualify it for the next tranche of rescue loans worth 2 billion euros.

As resistance to further austerity has grown in Portugal in recent weeks, the lenders have granted an extra year for Lisbon to make permanent spending cuts worth 2.5 percent of gross domestic product, or roughly 4 billion euros. These now have to be carried out incrementally until 2015 and not 2014.

Gross domestic product is expected to slump by 2.3 percent this year, much deeper than the 1 percent drop seen at the time of the last review in November. Last month, the European Commission forecast a contraction of 1.9 percent this year, mainly blaming Europe’s recession.

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