Portugal to trim social spending after court rejects other cuts


LISBON, Portugal — Portuguese Prime Minister Pedro Passos Coelho on Sunday announced new cuts in social security, health programs, education and state-run businesses after the nation’s Constitutional Court struck down austerity measures contained in the 2013 budget.

Passos Coelho’s center-right government rejected any further tax increases as he tries to meet the terms of a bailout agreed with the European Union and International Monetary Fund, which granted Lisbon an emergency loan worth $101 billion in 2011.

Passos Coelho said his government would do everything possible to prevent the need for a second bailout, and he accused the court of endangering the country.

“This government stands by all goals of the aid package,” he said. “The Portuguese government will comply with its domestic and international obligations.”

The Constitutional Court on Friday declared four of Passos Coelho’s austerity measures illegal, including the elimination of public workers’ and pensioners’ vacation bonuses, and cuts in unemployment benefits.

Portugal’s creditors agreed in March to give it one more year to cut its budget deficit from 6.4 percent of gross domestic product in 2012 to less than 3 percent.

In exchange, Passos Coelho promised to cut spending by a further $5.2 billion by 2015, but the court decision left him short about $1.7 billion and is forcing him to find new ways to cut spending. He refused Sunday to raise taxes, however, because the danger to the economy would be too great, he said.

(EDITORS: STORY CAN END HERE)

President Anibal Cavaco Silva late Saturday rejected the call for early elections despite the worsening of the nation’s financial crisis.

Socialist leader Antonio Jose Seguro on Saturday had called for early elections because Passos Coelho had lost his “credibility and authority.” Communist leader Jeronimo de Sousa said his party would be willing to enter a new left-wing government.

Cavaco Silva on Friday rejected calls for snap elections, saying the government’s legitimacy had been endorsed by a parliamentary confidence vote that Passos Coelho won this week.

Passos Coelho’s conservative government coalition has an absolute majority in Parliament.