Portugal Pledges Public Spending Axe to Continue Post-Bailout

Portugal has pledged to still cut public spending even after it exits its Troika funded €78bn bailout in the future.

During a press briefing, the government revealed that implementing strict austerity measures for a longer period of time is the key to maintaining economic stability.

"Portugal's spending is excessive if we look at our incomes, and our taxpayers are making one of the most demanding efforts in the European Union considering their quality of life," said deputy prime minister Paulo Portas.

At the beginning of May, Prime Minister Pedro Passos Coelho announced a set austerity measures to generate savings of about €4.8bn by 2015.

However, the country's per capita spending was about 30% higher than the European average when adjusted for purchasing parity. The tax burden was also 20% higher than the average.

"The main use and reason for the reform of the state is to reduce the tax burden and state bureaucracy," said Portas.

The 2011 Bailout

When Portugal was bailed out in 2011, by the International Monetary Fund, European Union and European Central Bank - dubbed the Troika, the government was forced to hike taxes as a condition set by international creditors to deal with its economic crisis.

Portas indicated that Portugal needed to reverse this trend of high taxes if it wanted to prosper in the future.

The government would attempt to "invert the trajectory of income tax rises and this process should begin under this legislature", he said.

The current legislative period runs until mid-2015 and the government said it wanted to start discussions with trade unions and business groups to work out the concrete details of these tax cut ideas.

Furthermore, Portas renewed calls for the "golden-rule" to be enshrined in the country's constitution that would bound governments to follow strict debt and deficit limits.

This would be in the national interest of Portugal and give "a clear message of confidence" to European partners and markets, he said.