Belt tightening

Portugal has become the latest country to introduce austerity measures, after both Greece and Spain took similar steps to stabilize public finances in the face of massive debt.

Portuguese Prime Minister Jose Socrates announced spending cuts to slash the 2011 target budget deficit to 4.6 percent of gross domestic product (GDP), down from a previous estimate of 5.1 percent.

"These measures are crucial to re-establishing confidence and secure financing for the country," Socrates said at a news conference in Lisbon.

The Socialist government plans to raise taxes and cut wages, as well as freeze publicly-financed projects such as the new Lisbon airport.

Last week, Lisbon pledged to reduce this year's budget deficit to 7.3 percent of GDP, rather than 8.3 percent originally proposed.

Over the limit

Last year, Portugal's deficit was a record. 9.4 percent.

Under the EU's Stability and Growth Pact, which is meant to safeguard the euro, eurozone members are required to keep public deficits under three percent of its GDP.

In Spain, trade unions announced a general strike after Spanish Prime Minister Jose Luis Rodriguez Zapatero on Wednesday announced austerity measures that would cut wages for public workers.

smh/Reuters/dpa
Editor: Chuck Penfold