LISBON, Oct. 15 (Xinhua) -- The Portuguese government will cut spending by 3.9 billion euros (5.3 billion U.S. dollars) next year to meet the deficit reduction targets set by international lenders, Finance Minister Maria Luis Albuquerque said Tuesday.
The Portuguese deficit this year would reach 5.9 percent of its gross domestic product (GDP) rather than the 5.5 percent agreed with the troika comprising the European Union, the International Monetary Fund and the European Central Bank, Albuquerque told a press conference on the 2014 draft budget.
The troika has set the deficit reduction target for Portugal in 2014 at 4 percent of its GDP, which is widely believed to be a mission impossible for the coalition government.
The finance minister said the 2014 budget would focus on massive cuts in spending instead of a drastic rise in taxation.
According to the budget, salaries of civil servants will be cut by 2.5 percent to 12 percent for earnings over 600 euros (811 dollars) per month. The retirement age will be raised from the current 65 to 66.
Value-added tax (VAT) on restaurants will remain at 23 percent instead of 13 percent as many have demanded.
Portugal's GDP is expected to grow 0.8 percent in 2014 while its unemployment rate is expected to hit 17.7 percent.
Since the Portuguese government and the troika clinched the 78-billion-euro (105-billion-dollar) bailout agreement in May 2011, the government's draconic austerity measures have been blamed for lingering recession and caused widespread protests across the country.