Portugal

Portugal's center-right government presents its 2013 budget on Monday, which will outline the harshest measures yet under Lisbon's 78-billion-euro bailout and is likely to mark the end of the country's so far reluctant acceptance of austerity, Reuters reported.The budget will face immediate opposition from angry Portuguese, who plan to march on parliament to demand the resignation of the government and an end to austerity, which has sent Portugal into its worst recession since the 1970s.

Spanish discount supermarket chain Dia is to acquire the Spanish and Portuguese arms of insolvent German drugstore chain Schlecker, it said on Friday, to diversify its product range and expand its presence in the two countries, Reuters reported. Dia has agreed to pay 70.5 million euros ($90.6 million) for Schlecker's 1,127 stores and three distribution centres in Spain and 41 stores and one distribution centre in Portugal. Schlecker filed for insolvency in January. The German company reported net sales of 318 million euros on the Iberian peninsula in 2011.

Portugal’s prime minister will meet trade unions and employers on Monday to discuss alternative austerity measures after mass protests forced him to ditch a contentious plan that would have cut workers’ pay to finance a reduction in companies’ costs, the Financial Times reported. Following a furious public backlash against tougher austerity, Pedro Passos Coelho faces the difficult task of convincing labour leaders and recession-hit employers that further spending cuts and tax increases are needed to keep Portugal on track with its €78bn bailout programme.

Portugal’s fiscal reforms are giving investors the greatest confidence in its debt in more than a year, even as its economy struggles under the weight of austerity, Bloomberg reported. Credit-default swaps on Portugal dropped as low as 725 basis points today, from 1,515 in January and 1,237 in May. The contracts have fallen by the most of any government this year and by more than every nation except Ireland in the past month.

The Portuguese government will inject €6.6bn into three of the country’s largest banks, becoming the latest eurozone country to tap international bailout funding for an undercapitalised financial sector, the Financial Times reported. Vítor Gaspar, Portuguese finance minister, said the funds would ensure that Banco Commercial Portugues, Banco BPI and state-owned Caixa Geral de Depósitos met tough new capital requirements set by the European Banking Authority.

From 2013 there will be a five-year hiatus during which two religious holidays and two public holidays will be cancelled. All Saints Day, Corpus Christi, a commemoration of the formation of the Portuguese Republic and a holiday celebrating independence from Spanish rule will all now be regular working days, The Telegraph reported. Portuguese daily Diario de Noticias reports that the Portuguese Catholic Church claims to have reached an "exceptional understanding" with the country over the suspension.

The dependence of the Portuguese banking system on the European Central Bank rose to a record high in March, as banks took advantage of easier borrowing conditions, The Wall Street Journal reported. Bank of Portugal said domestic banks' use of the ECB's various credit facilities rose to €56.32 billion ($73.76 billion) from €47.55 billion in February. Seven individual central banks in the euro zone, including Portugal's, received approval from the ECB in February to expand the type of assets banks can pledge to tap loans.

Portugal’s town halls face default amid 9 billion euros ($12 billion) of debt unless the government provides aid soon, said Fernando Ruas, president of the nation’s association of municipalities, Bloomberg Businessweek reported. “At a company we call it insolvency,” Ruas said in a telephone interview from Lisbon on March 21. “It could happen that some town halls could have to restructure their debt if the government doesn’t intervene.” Ruas blamed a sharp decline in money transfers from the government in Lisbon to municipalities for their growing financial woes.

Portugal's economy continued to contract in the final three months of 2011, the country's statistics agency said Friday, as austerity measures hit domestic demand and the euro-zone crisis slowed exports, The Wall Street Journal reported. Portugal's gross domestic product shrank 2.8% in the fourth quarter on an annual basis, and fell 1.3% from the third quarter, according to final calculations from the National Statistics Institute. The annual drop was slightly deeper than the 2.7% contraction reported in an estimate last month.

Portugal is on track to meet the terms of its €78bn bail-out programme, but needs to step up reforms to face difficult challenges ahead, according to an assessment by international lenders, the Financial Times reported. In a joint statement on Tuesday, the European Commission, International Monetary Fund and European Central Bank said Portugal had achieved a “large fiscal correction in 2011”. But it warned that the recession-hit economy would “continue to face headwinds” as unemployment and bankruptcies increased.