European Union executive accepts Portugal’s 2016 draft budget after changes

Portugal has cut its growth forecast to 1.9 percent from 2.1 percent for 2016, after Brussels said the estimate in its draft budget was also overly optimistic.

Portuguese Finance Minister Mario Centeno said the deficit would drop to 2.2 percent of GDP this year, within the EU’s limit of 3 percent.

The new Socialist-led minority government, allied with the radical left, cut its projected budget deficit to 2.4 percent of Gross Domestic Product (GDP), from 2.6 percent announced two weeks before, the official said on condition of anonymity.

LISBON, Portugal (AP) – In a tug of war over budgets, the European Commission approved Portugal’s so-called anti-austerity spending plan on Friday, but only after extracting a promise for nearly $1 billion in additional cost cuts.

The Portuguese government and the European Commission have engaged recently in tough negotiations on the country’s state budget in 2016. He added that “problems have been overcome”, but refused to speculate on what the Commission’s final decision would be. “We have shown it is possible to turn the page (on austerity) and still remain in the euro”, Costa said. Those changes are now being discussed, with Friday the deadline for the Commission to decide whether to send the budget back for redrafting.

“There is still work to do however and I hope we will reach an agreement within the next few hours”, he told a briefing on the European Commission’s winter growth forecasts.

The government is expected to unveil its annual spending and revenue plan on Friday.

The country needs to coordinate its budget plans with Brussels to meet the austerity terms of the Commission’s 2011-2014 bailout program. Portuguese lawmakers said the original plans included tax hikes for banks and vehicle and gas sales, among other measures.