Portugal warns it may need revised deficit targets

LISBON (AFP) - Portugal may request a third revision to deficit targets agreed with EU-IMF creditors as part of its 78-billion euro (S$126 billion) international bailout, Prime Minster Pedro Passos Coelho warned on Friday.

"It is not excluded that it will be necessary to ask for further revision for 2014," Mr Coelho said in parliament.

The revision from the agreed 4.0 per cent of output would be the third one granted to Portugal after already winning leniency from the European Union and International Monetary Fund in March and December.

The warning comes as a new government spending package, announced by the centre-right government earlier this month, foresees the slashing of 30,000 public sector jobs out of a total 700,000.

The new terms are aimed at ensuring continued aid payments from a package worth 78 billion euros granted in May 2011.

Mr Coelho said that the 2013 deficit target of 5.5 per cent of gross domestic product would however be met, even though budget figures for the first three months of the year were already off the mark.

Hit hard by the euro zone debt crisis, Portugal's economy has been in recession for two years, and contracted by another 0.3 per cent in the first quarter with unemployment at a record high of 17.7 per cent.

On Thursday, Portugal unveiled a massive tax credit for businesses that make investments up to 5 million euros.