Portugal tightens budget further to avoid bailout

Finance Minister Fernando Teixeira dos Santos has said Portugal will tighten its austerity measures to ensure it meets its deficit reduction targets, hours ahead of a summit on the eurozone debt crisis.

"We are going to reinforce the measures to reduce planned expenditures in 2011 in order to open up a supplementary margin which will guarantee in an even stronger manner attaining the target of a public sector deficit of 4.6 per cent" of gross domestic product, he said on Friday.

Portugal has come under increased speculation in recent days that it will be forced to follow Greece and Ireland in being forced to accept an international bailout. Investors have driven Lisbon's borrowing costs to levels widely considered unsustainable in the long-term, with yields on its 10-year bonds at 7.403 per cent on Wednesday. 

Dos Santos said the additional measures were necessary due to the risks tied to the volatility of debt markets, where Portugal now has to pay record levels of interest to investors since it adopted the euro. 

Source: ninemsn