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| Portugal announces tough new austerity measures |
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| Sunday, 10 October 2010 05:06 | |||||
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The suffering among cash-strapped Portugal has announced further tough austerity
measures. Next year will increase the VAT by two percentage points to 23
percent, Prime Minister Jose Socrates said in an address to the nation. In
addition, the salaries in the public service will be reduced on average by five
percent, with concrete decides the level of wages above the level of losses.
"The effort we must make to balance the public purse, is absolutely essential to defend the international credibility of our country and guarantee the financing of our economy," Socrates explained the cuts. Portugal, along with Greece, Spain and Ireland, one of the budgetary problem children in the euro zone.
In the words of Socrates, the Government plans including a new levy for
the financial sector, the elimination of tax breaks and the freezing of
pensions.
Despite continuing doubts about the creditworthiness of Portugal has in the past week, 750 million euros on new government debt market. Interest rates, which were paid for the euro country must, however, is significantly higher than the last.
In recent months, speculation had been repeatedly whether countries
such as Portugal and Ireland will need financial assistance from the EU or the
International Monetary Fund. The national debt is particularly high in those
states.
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