Portugal's Prime Minister Pedro Passos Coelho addresses a news conference at the end of an European Union leaders summit in Brussels on June 24, 2011. Portugal announced Tuesday they would meet the austerity goals set by the EU and International Monetary Fund. | Sebastien Pirlet/REUTERSSEBASTIEN PIRLET/Reuters
Portugal's new centre-right government submitted a four-year program to parliament on Tuesday, promising to strictly fulfill the country's obligations under a €78-billion ($111-billion U.S.) international bailout.
As previously agreed with the European Union and the International Monetary Fund, the government said it will raise value-added tax on some goods that enjoyed lower tax rates, while reducing social security contributions by companies.
It will sell stakes in companies such as Energias de Portugal - the country's biggest utility company - and grid operator REN this year. It also plans to sell airline TAP and the insurance business of state-run bank CGD although it did not give a time-frame for those two.
"The Portuguese state has to scrupulously fulfill all obligations assumed internationally, which is needed to regain external financing and return to growth and job creation," the program said.
Portuguese media have said the government was likely to accelerate the program so as to ensure it meets this year's budget deficit target of 5.9 per cent of gross domestic product, but the document did not contain deadlines for most measures.
Prime Minister Pedro Passos Coelho told Reuters earlier this month his government may even go beyond the conditions of the loan pact to create "a wave of confidence in the markets."
Portugal's budget deficit ended last year at 9.1 per cent, exceeding the previous government's target of 7.3 per cent. The country has to slash the gap to 3 per cent of GDP by the end of 2013 under the bailout deal.
Parliament, where the centre-right ruling coalition has a comfortable majority, will discuss the program on Thursday and Friday, and the government is likely to elaborate on the timing of its measures then.
Portugal's previous minority Socialist Party government resigned in March, exacerbating the country's debt crisis, which forced it to follow Greece and Ireland in seeking a bailout.