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Factbox: Portugal's painful austerity path - likely new spending cuts

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(Globalpost/GlobalPost)

LISBON (Reuters) - Portugal's government is preparing new spending cuts to meet the fiscal goals of its international bailout, in a move that will likely test the public's tolerance for austerity in a country already in its deepest recession since the 1970s.

Last week's rejection by the constitutional court of austerity measures worth up to 1.3 billion euros in this year's budget makes the need for cuts particularly acute.

The new measures add to the government's daunting cuts in public expenditure in 2013-2015 worth 4 billion euros, as already promised by Lisbon to its European Union/International Monetary Fund lenders.

The new hole to be plugged is equivalent to about 0.8 percent of gross domestic product, roughly the same as this year's planned reduction in the budget deficit to 5.5 percent from 6.4 percent in 2012.

The government has already cut primary spending by 13 billion euros to 70 billion in the last two years.

Finance Minister Vitor Gaspar is expected to present the guidelines for this year's extraordinary cuts to a meeting on Friday of euro zone finance ministers in Dublin, where he hopes to achieve an extension of rescue loan maturities.

Next week, European Commission, European Central Bank and IMF representatives will visit Lisbon to work with the government on these and wider cuts to take place through 2015.

Following is a list of likely measures that the government will propose, according to analysts and official sources:

PUBLIC ADMINISTRATION:

* Across-the-board reduction in the number of civil servants, who make up about 600,000 or 12.4 percent of the workforce, with their wages accounting for 10 percent of GDP.

* Incentives for voluntary redundancy

* Making public sector workers more mobile so they can fill jobs across the country

* Cuts in overtime pay

* Centralisation of some services and sharing of others

SOCIAL SECURITY:

* Setting ceilings for state pensions. Overall pension payments now account for 14 percent of GDP.

* Raising the retirement age to 66 or 67 from 65 now

* Limits on early retirement

* Uniform rules for public and private sector pensions

* Tougher rules for family allowances, unemployment benefit and post-layoff retraining aid

* A ceiling on accumulated payments to individual welfare recipients

EDUCATION:

* Cuts in the overall number of teachers by not replacing retiring teachers, laying off contractors and not renewing contracts. In 2012, the state employed 160,000 teachers, 117,000 of them on permanent contracts.

* Closing schools, consolidating pupils in fewer schools

* Greater teacher mobility

* Increasing fees for higher education

HEALTHCARE:

* Laying off temporary staff, contractors

* Reducing overtime work and pay for doctors and nurses

* Requiring people to pay more to see a doctor

* Raising access fees that discourage excessive demand for medical services

* Introducing co-payments by patients on state healthcare plan

* New negotiated reductions in medicine prices

* Further cuts in hospital operating expenses

(Reporting By Sergio Goncalves, writing by Andrei Khalip; Editing by Hugh Lawson)

http://www.globalpost.com/dispatch/news/thomson-reuters/130412/factbox-portugals-painful-austerity-path-likely-new-spending-cu