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Merkel hails Portugal's austerity efforts

German Chancellor makes another trip to bailed-out eurozone country in show of support for Lisbon's stance on cuts.
Last Modified: 13 Nov 2012 05:25
Dozens of demonstrators gathered outside the palace where Merkel was meeting President Anibal Cavaco Silva [AFP]

Anti-austerity protesters had gathered outside Portugal's presidential palace to greet German Chancellor Angela Merkel with chants and placards telling her she is not welcome.

Merkel, who landed shortly before midday (12:00 GMT) on Monday, was set to renew her endorsement of spending cuts and tax increases being pushed through by fellow conservative Prime Minister Pedro Passos Coelho to meet the terms of last year's German-backed European rescue deal for the deeply indebted Portuguese state.

Her six-hour visit also seemed intended to reassure German voters that the bailout money they lent is being well used.

"Of course a programme of this kind sparks major debate but the government has shown great courage in taking these measures," Merkel said in an interview with Portuguese television broadcast on Sunday.

"It is a long and hard process and I know it requires many sacrifices," she told RTP television, but said that there was no need for any renegotiation of the terms of the programme to restructure the economy.

'Right to be angry'

But though she is unlikely to suffer the tear gas and Nazi taunts which soured a similar visit to troubled Athens a month ago, Portuguese patience with austerity, once much remarked on, has begun to fray during the worst slump since the 1970s.

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Hundreds of police were on patrol, halting traffic around Lisbon's presidential palace; barriers were set up
and squads of riot police parked nearby, ready for trouble.

Only a dozen or so protesters initially had gathered by late morning under a banner reading: "For the right to work, for the right to be angry" and were soon joined by a few dozen more as Merkel arrived to meet Portuguese President Anibal Cavaco Silva.

Following her meeting with Cavaco, the German Chancellor headed to meet premier Passos Coelho before addressing business chiefs at a conference.

In a startling example of how a consensus on deficit-cutting has broken down within the Portuguese establishment, a major business newspaper, Diario Economico, ran an opinion piece on Monday condemning Merkel for pushing the Portuguese government to impose austerity measures in the depth of a recession.

The German leader, however, has insisted that only reforms to cut the public deficit can restore growth and she and her ministers have cited Portugal as a model for other debtors.

Lenders of the European Union and International Monetary Fund have already relaxed targets on the budget as recession saw tax revenues this year fall below expectations; opponents on the left say government cuts are creating a vicious downward spiral.

'Problem child'

Last month, the country's centre-right coalition adopted an austerity budget for 2013 that includes swinging public spending cuts and sharp tax increases.

Al Jazeera's Nick Spicer, reporting from Lisbon, said: "Merkel is trying to show voters in Germany that money has been spent well in European bailouts."

"Portugal comes across as a poster child - when once it was a problem child - due to the reforms and the balancing act the government has tried to play."

"They're not into throwing Molotov cocktails at the riot police, but there are posters of Angela Merkel dressed up like a pig," our correspondent said. "It's not as violent as you would see in other countries going through a sovereign debt crisis."

The measures are required by the country's international creditors, the European Union, the International Monetary Fund and the European Central Bank, which extended a $101bn bailout in May 2011.

In return, Coelho has undertaken to cut the public deficit to 4.5 per cent of gross domestic product next year, from a target of 5.0 per cent this year.

His government is seeking a $6.9bn in savings, 80 per cent of which coming from tax hikes.

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Source:
Al Jazeera And Agencies
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