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Portugal says EU-IMF-ECB auditors to make special visit

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(Globalpost/GlobalPost)

Auditors from Portugal's international creditors will make an additional visit to the country in the coming weeks as it seeks to find new spending cuts after a court ruling rejected a number of austerity measures, an official said Monday.

Following the Constitutional Court's rejection of several budget measures, auditors from the so-called troika of the EU, IMF and ECB "will make an additional visit to Portugal", Finance Minister Vitor Gaspar said in a statement.

The court ruled Friday that several measures in the government's 2013 budget were unlawful, including the scrapping of a bonus 14th month of salary for civil servants and retirees, as well as cuts to unemployment and sickness benefits.

The government condemned the decision, which will see it lose out on about 1.2 billion euros ($1.6 bn) in savings, making it difficult to reduce the public sector deficit to 5.5 percent of gross domestic product to keep it eligible for funds under its 78-million-euro bailout from the European Union and International Monetary Fund.

Portuguese Prime Minister Pedro Passos Coelho on Sunday called for further cuts in public spending instead of raising taxes to make up the gap, with social security, health and education likely to feel the brunt of the additional cuts.

At the end of its last quarterly review at the end of March Portugal was tasked with presenting a new plan for cutting public expenditure by four billion euros by 2015.

"The presentation of budget savings for 2014 constitutes a precondition for the disbursement of the next instalment" of 2 billion euros under the rescue programme, the minister noted in his statement.

The troika auditors are expected to make their special visit in the coming weeks, a government source said.

The next scheduled visit is for May.

The European Commission warned Portugal on Sunday that the country must respect all the conditions of its rescue programme if it wants to renegotiate the repayment deadline on its bailout loans.

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http://www.globalpost.com/dispatch/news/afp/130408/portugal-says-eu-imf-ecb-auditors-make-special-visit-0