Portugal Unleashes New Extreme Austerity Budget

Protesters vent their frustration during a rally on October 5 with a defaced portrait of Prime Minister Coelho (Reuters)

Portugal Unleashes New Extreme Austerity Budget

Portugal's leaders announced a new round of harsh austerity measures in the country on Monday, including steep tax hikes and massive pay cuts in the already unemployment stricken country. The round of cuts is said to be one of the harshest in the country so far, with wage earners losing up to an entire months amount in pay.

Protest organizers have called for protesters to surround parliament to mirror the like-minded protests in Spain last month. No protests have been reported; however, the General Confederation of Portuguese Workers, the largest union group with 600,000 members, announced a general strike against austerity for Nov. 14.

Announcing "very significant" tax hikes, in the 2013 draft budget today, Finance Minister Vitor Gaspar said Portugal was committed to a three-year debt reduction program with international creditors--the International Monetary Fund, European Central Bank and the European Union--in exchange for the billions of dollars of bailout money Portugal has received. Portugal received EUR78 billion ($101 billion) in rescue funds last year.

Gaspar said he also intended to cut an additional EUR2.7 billion next year by laying off 2 percent of the country's 600,000 public employees.

Unemployment has reached record highs in the country at 15 per cent. The government expects it to rise to 16.4 per cent next year.

The leader of the main opposition Socialist Party, Antonio Jose Seguro, said the measures were "a fiscal atomic bomb" that will destroy the country.

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