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Portugal announces 2013 budget

  • The Portuguese government on Monday announced details of its draft budget for 2013.

    Finance Minister Vitor Gaspar confirmed the average income tax rise would increase from 9.8 percent in 2012 to 13.2 percent next year.

    Portugal was granted a $100 billion bailout last year. Gaspar stated the budget was the only way for the country to meet its bailout targets.

    "We have no room for manoeuvre. Asking for more time (under the bailout) would lead us to a dictatorship of debt and to failure,” he said.

    Gaspar also announced spending cuts worth nearly $3.5 billion, which includes laying off 2 percent of the country's 600,000 public sector workers.

    The 2013 budget is set up to enable Portugal to cut its budget deficit to 4.5 percent.

    It must eventually lower its deficit below the European Union target of 3 percent of GDP.

    Portugal is currently in the throes of its worst recession since the 1970s, with an unemployment rate above 15 percent.