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Portugal has 'colossal' public finances gap
Tuesday 19 July 2011 - by Nicola York
The new Portuguese government has found a "colossal divergence" in the public finance accounts prepared by the previous government compared to its analysis of the budget, which amounts to a €2bn ($2.8bn) hole.
Recently-appointed Portuguese Prime Minister Pedro Passos Coelho says former Prime Minister José Sócrates' Socialist Party, left the country with the €2bn budget gap and said it will have to be dealt with through further cuts in public expenses.
Special tax measures and some cuts have already been outlined to address Portugal's beleaguered public finances with a more detailed programme of cuts expected to be announced within a month.
Social Democrat Passos Coelho stressed that the deficit target of 5.9 per cent of GDP will be met - as agreed under the European Union and International Monetary Fund's €78bn ($116bn) three-year bailout programme. At present, the deficit stands at 7.7 per cent of GDP.
But he said: "We want to take part in an ambitious European project and make our contribution so Europe can confront its problems in the most ambitious way, but as Prime Minister I will not stand by and let Europe govern Portugal."
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