Socrates claims to have drastically cut the state budget deficit - from the International Herald Tribune
Portugal's economic reforms and austerity measures enabled the government to cut the country's state budget deficit to 3.9 percent of gross domestic product last year, down from 6 percent in 2005, Prime Minister Jose Socrates said Wednesday.
Despite the improvement, Portugal remains in contravention of the rules governing membership of the euro currency which limit deficits to 3 percent of GDP. Portugal's deficit is also the highest of the 13 countries using the currency.
Socrates told Parliament that his center-left Socialist government's austerity program and reforms, which are broadly contested by opposition parties and labor organizations, were paying off.
"The effort being made by the Portuguese people is worthwhile and is beneficial for the country as a whole," Socrates said.
The government aims to get the deficit below 3 percent by the end of next year.
As well as launching public sector reforms, the government has reduced spending and investment, increased taxes and reduced health and retirement benefits for civil servants. The measures have brought widespread labor protests.
Analysts say the belt-tightening measures slowed the country's economic growth.
The Portuguese economy grew 1.3 percent in 2006 compared to 0.8 percent the previous year. The government predicts growth of 1.8 percent this year.