Begrotingstekort Portugal bereikt piek van 6,8 procent (en)

EUOBSERVER / BRUSSELS - The Portuguese budget deficit has reached a sky-high 6.83 per cent of gross domestic product (GDP), the Lisbon government confirmed on Monday (23 May).

The announcement follows rumours that were circulating in the Portuguese press early on Monday morning, the day when the Governor of the Portuguese National Bank, Victor Constâncio, presented an independent report on the state of the country's finances to the Portuguese prime-minister, José Sócrates.

The report was prepared by an independent panel of experts who was chaired by Mr Constâncio himself.

"We will take all the necessary measures for the economy to resume the desired growth", assured the Portuguese minister for Finance, Luís Campos e Cunha, quoted in the Portuguese daily Público.

Mr Cunha, who read a statement to the press, did not mention what measures the government will take.

The deficit, which refers to the the time of the Socialist party's election (March 2005), is the highest official public deficit currently in the 12-nation euro zone.

According to an opinion column by Mr Cunha published last week in the same paper, the Portuguese deficit would only fall below the 3 per cent of GDP ceiling, established in the EU's Stability and Growth Pact, by 2008.

According to a pool of leading Portuguese economists interviewed by Diário Economico, a solution would have to include hikes in indirect taxes and a reduction of the number the civil servants, which currently number around 700,000 in Portugal.

The news prompted the scheduling of an emergency meeting of the Portuguese cabinet which is set to take place tomorrow.

The European Commission was unavailable for comment.

Portugal was the first euro zone member state to cross the EU deficit red line in 2001, posting a deficit of 4.4 percent of GDP. Governments in the following years managed to keep the numbers within the limits, through a mix of asset sales and more conventional austerity measures.