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Pedro Passos Coelho says his government will continue with austerity policies despite resignations of two key ministers.
Resignation of Vitor Gaspar comes amid rising social discontent over austerity measures.
EU finance ministers agree to grant both euro countries seven more years to repay their bailout loans.
Budget raises taxes and envisages retrenchment of 12,000 public-sector staff as recession grips the economy.
Draft budget set to raise taxes despite austerity fatigue and can push Portugal into a recessive spiral like Greece.
Move replaces previous plan that had to be abandoned in the face of widespread opposition and anti-austerity protests.
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Ministers and MPs caught on camera sleeping through important speeches have sparked criticism that they are not working.
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