Portugal opposition chief demands renegotiation of bailout

Tue Feb 26, 2013 9:25am EST
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By Axel Bugge

LISBON (Reuters) - Portugal should renegotiate the terms of its international bailout because its program of budget cuts has failed and sent the economy into a slump, the head of the main center-left opposition said on Tuesday.

The Socialists, who agreed Portugal's original deal with the IMF and European Union in 2011, have been calling for some time for an easing of the spending cuts and tax hikes that have driven the small euro zone member state into deep recession.

But until now they had stopped short of demanding new talks on the terms of the 78 billion euro ($103 billion) bailout.

"We need more time and a delay of interest payments," Socialist head Antonio Jose Seguro told journalists. "There cannot be more austerity, there has to be a strategy of growth."

He was speaking a day after Portugal's creditors started their seventh review of the bailout [ID:nL6N0BP9WL] and after Italy's inconclusive election renewed euro zone crisis fears.

The government is expected to request an easing of budget goals, but has also said it has plans for contingency measures to reduce deviation from these goals, mainly further spending cuts.

"I hope the government refuses proposals (by the 'troika' of lenders) for more austerity," said Seguro. "A renegotiation implies more time for our budget consolidation and it means lower interest payments. The Portuguese cannot take any more."

The economy is mired in its worst recession since the 1970s and unemployment is at record highs at just under 17 percent.   Continued...

Portugal's Socialist Party secretary-general Antonio Jose Seguro speaks during an interview with Reuters in Lisbon May 24, 2012. REUTERS/Rafael Marchante