EU gives Portugal an extra year to reduce its deficit

EU finance and economic ministers meeting in Luxembourg today agreed to give Portugal an extra year, until 2014, to correct its excessive government deficit The ministers in a statement said they presented a revised recommendation to Portugal on measures to be taken to bring its government deficit below the EU's 3% of GDP reference value in 2014, and relaxed the deficit targets set for 2012 and 2013. The recommendation sets deficit targets of 5,0% of GDP for 2012, 4,5 % of GDP for 2013 and 2,5 % of GDP for 2014. This follows the fifth review by the so-called troika (the European Commission and the IMF, in liaison with the European Central Bank) of progress by Portugal in implementing its economic adjustment programme. According to the Euroean Commission's economic outlook for Portugal, real GDP is expected to contract by 3 % in 2012. For both 2013 and 2014, it has been revised downward by about 1 percentage point, to around -1 % and +1 % respectively.. Portugal last year received a 78 billion euro bailout from the EU and the IMF to deal with its financial crisis. Finance ministers from the 17-member Eurozone yesterday decided to release 800 million euros from the bailout for Portgual.