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Portugal fears more budget cuts may be required: minister

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(LISBON) - Portugal's finance minister said on Sunday that "insatiable" markets may demand more austerity measures, even after the country unveiled aggressive deficit reduction in its 2011 budget.

"There is a type of insatiability in the market concerning measures of this nature," Fernando Teixeira dos Santos said in an interview with Publico newspaper.

"We have taken tough measures, imposed sacrifices, but we never know whether the markets will demand more and perhaps ask us for more. If they want more, it is hard to see what more can be done," he said.

The budget, which was delivered to parliament late on Friday, aims to reduce the gap between tax revenues and expenditure from 7.3 percent of gross domestic product to 4.6 percent by the end of next year.

The Socialist minority government set out a programme of tax rises, reduction in tax breaks and welfare handouts, as well as a series of cost-saving measures including reduction in civil service payrolls, a pensions freeze and spending cuts within many ministries.

Portugal has been hard hit by the economic downturn and in common with most governments in the European Union, its expenditures have shot far above revenues.

In the last six months it has experienced tension in raising money on sovereign debt markets owing to concern about the size of its deficit and debt, although these tensions eased ahead of the publication of the budget.

"I am confident of the immediate impact of these measures. This package of measures is sufficiently strong to send a clear signal of our determination to overcome this situation," the finance minister said.


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