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Portuguese Prime Minister Jose Socrates, right, talks with the opposition Social Democrat leader Pedro Passos Coelho at Sao Bento palace in Lisbon.

Portugal averts political crisis, agrees on 2011 budget

A budgetary agreement has been reached in Portugal – one of the euro zone’s weakest members.

A POLITICAL CRISIS has been averted in Portugal, after the minority government and opposition parties finally reached an agreement regarding the country’s 2011 budget, RTÉ reports.

Portugal’s leading Socialist government and opposing Social Democrat party (PSD) have been butting heads over the upcoming economic plan, in an lengthy argument that has threatened to plunge the country into a political meltdown.

The failure to produce a budget would have meant Portugal would have been forced to appeal for a financial rescue from EU partners, similar to that which Greece received.

However, the finance ministry has confirmed today that an accord has been reached.

Prime Minister Jose Socrates and PSD leader Pedro Passos Coelho began new talks on shape of the upcoming budget; the PSD has insisted upon more spending cuts and smaller increases in taxes to cut the budget deficit.

Socrates has vowed to cut the country’s deficit of 7.3 per cent to a more manageable 4.6p per cent of GDP next year. His party must rely on the PSD to either vote for the budget or abstain in order for it to be passed.

The first parliamentary vote is scheduled for next Wednesday.

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