Portugal's government announced a plan to cut spending and raise revenues in the euro zone's latest round of austerity measures aimed at stabilizing the currency and bringing deficits within EU regulations.
Portugal must be thrifty to comply with EU rules
Portugal's budget-trimming plan consists of reduced pay raises and hiring and for civil servants, cuts in welfare payments and privatization of some state assets.
Portuguese Finance Minister Fernando Teixeira dos Santos told reporters at a news conference Monday that spending cuts would be the focus of the plan, while tax hikes would be limited to the wealthy.
"This is a bet on reducing the weight of the state in the economy and the weight of public spending," he said. "The plan has to be credible to restore confidence."
The government hopes to achieve a 2.8 percent budget deficit by 2013, down from its record 9.3 percent in 2009. The EU's 27 member states agreed to limit deficits to 3 percent in their so-called Stability and Growth Pact.
Strikes shut down public offices across Portugal in early March
Details of the austerity measures included cuts in military spending by 40 percent by 2013 and two-year delays to the planned Lisbon-Porto and Porto-Vigo high-speed rail links.
The plan is likely to be unpopular with public sector workers, tens of thousands of whom went on strike last week to protest wage freezes and other spending cuts.
The minority socialist government urged opposition leaders to embrace the plan, calling it a "national effort" that was vital to the country's economic success.
The opposition Social Democratic Party declined to comment on the specifics of the plan, but said it would welcome "adjustments made in line with proposals from other parties."
Austerity measures in Portugal follow similar cuts in cash-strapped Greece, where fears of a credit default have devalued Greek bonds and the euro's worth against foreign currencies.
Editor: Jennifer Abramsohn