Portugal’s government defends deeper austerity

LISBON, Portugal (AP)Portugal’s government is trying to defuse tension over its plan to cut state spending by €4 billion ($5.2 billion) over the next two years after a leaked report suggested further salary and pension cuts and more layoffs are in the pipeline.

Portugal needed a €78 billion bailout in May 2011 and has already endured several years of austerity. The unemployment rate is at a record 16.3 percent.

A report by the International Monetary Fund published Wednesday proposed a 20 percent cut in state pensions and laying off 50,000 staff in the state education system, among other measures. The suggestions triggered a broad outcry.

Carlos Moedas, the secretary of state overseeing implementation of the bailout program, said slimming down the state is “crucial” but promised the government would seek a consensus.