Portugal overspends 2011 budget

Portuguese Finance Minister Vitor Gaspar said Wednesday that the country will be 3.4 billion euros (4.8 billion U.S. dollars) over the 2011 budget. During a parliamentary debate on the rectified budget for 2011, Gaspar said that out of the 3.4 billion euros spent in excess, only 1 billion(1.4 billion dollars) will be covered by austerity measures. The rest will have to be included in the 2012 budget. The figures were presented as the minister explained about the cut of 13th and 14th month salary payments for all civil servants. "These measures are strictly necessary to deliver the financial assistance program goals, because the national situation is critical," he said. The minister justified the austerity measures the government took to reduce the public deficit as the nationalization of pension funds will provide 2.4 billion euros (3.4 billion dollars) to reduce the deficit. He said if there would be no austerity measures, the actual deficit would be 7.9 percent of the gross domestic product (GDP). The bailout program for the Portuguese economy is based on an agreement signed by the government, which has pledged not to exceed a deficit of 5.9 percent of GDP. If Portugal does not achieve this goal, the loan tranches will be halted. Portugal is currently applying austerity policies it has agreed upon with the European Union and the International Monetary Fund, which granted it a bailout of 78 billion euros (110 billion U.S. dollars). Portugal was the third eurozone country to be rescued after Greece and Ireland.