By Valentina Pop | EUobserver
Recession-hit Portugal is likely to miss its deficit target this year, the troika of international lenders is expected to conclude next month following its return to Lisbon on Tuesday (28 August) to take stock of the bailout programme.
Portugal’s tax revenues have shrunk amid harsh austerity measures and as the economy continues to contract at a rate of over three percent.
The Portuguese treasury has made public that it is short of €2 billion in tax revenues compared to what they had expected until July. Government spending has been reduced by 1.7 percent, as required by the terms of last year’s €78 billion bailout.
According to the ministry of justice, the number of bankruptcies decreed in courts increased by 77 percent in the first three months of this year compared to the same period last year. Unemployment is also at a record 15 percent, which means the country is likely to miss its 4.5 percent deficit target this year.
Similar to Greece and Spain, the only way out is for its deficit deadline to be extended or for more austerity measures to be imposed – a decision which may further hurt its economy.
Portugal has so far been among the ‘A students’ of the bailed out countries, with German and EU officials regularly praising its efforts, in a bid to underline that southern countries can make it out of the crisis through austerity and labour market reforms.