LISBON: Portugal's Prime Minister Jose Socrates defended a tough budget as parliamentary debate began on Tuesday under a pact with the opposition expected to avert a government crisis and renewed strains in the eurozone. The 2011 budget will cut the public deficit to 4.6 percent of gross domestic product from 7.3 percent this year through a mixture of spending cuts and higher taxes. The EU deficit ceiling is 3.0 percent. The Socialist prime minister has compromised over his measures, which are hugely unpopular, in order to obtain abstention on the vote from the main opposition PSD party. Socrates had warned that rejection of the budget would lead him to resign, provoking a crisis in Portugal. The European government debt market has shown tension over the funding of the Portuguese public deficit recently and nervousness over the possible effect of a crisis in Portugal on bond yields in the eurozone. Portugal is a member of the eurozone where memories of the Greek debt crisis this year are still raw. Socrates said on Tuesday his minority government's 2011 austerity budget was tough but essential to bolster Portugal and put right its strained public finances. “The budget begins a recovery in the public finances which is both demanding but indispensable,” Socrates said as parliament began debate on the package which is expected to be passed in a first reading on Wednesday. – Agence France
