Portugal Struggles To Avoid 2nd Bailout

Portugal's creditors are evaluating the country's latest austerity package, which includes 30,000 public sector layoffs, to determine whether Lisbon might need a second international bailout. The Portuguese government is raising the retirement age and lengthening work weeks to try to squeeze out more revenue, and repay its bailout loans.

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Europe is debating whether austerity - with its deep budget cuts and tax hikes - is the right cure for the continent's debt crisis. But in Portugal, one of the first countries bailed out by the European Union, the austerity drive goes on. The government there is struggling to repay its loans, and has announced more steep job and benefit cuts, as the country struggles to avoid what was Greece's fate - a second bailout.

Here's Lauren Frayer reports.

LAUREN FRAYER, BYLINE: Protesters and TV crews gathered outside Portugal's finance ministry last night, where the government is negotiating with unions this week about 30,000 new public sector layoffs. The retirement age is going up, and the work week is getting longer - without any additional pay.

PRIME MINISTER PEDRO PASSOS COELHO: (Portuguese spoken)

FRAYER: The benefits of austerity will come, Prime Minister Pedro Passos Coelho, told the nation on live TV. We cannot give up.

But many already have.

PEDRO LAINS: People are tired. I think most people don't understand what's going on, and that makes them more depressive.

FRAYER: University of Lisbon economist Pedro Lains says that while there's been backlash against austerity in Greece and Spain, Portugal has been Europe's good student - taking the medicine its creditors dole out. But its economy hasn't bounced back. In fact, it's been shrinking for three years, and unemployment is rising.

LAINS: I don't think this will avert a second bailout at all. Because the economy is going to react negatively and the status of the economy is what is going to determine the second bailout - not austerity.

FRAYER: Representatives from the European Union, International Monetary Fund and European Central Bank arrive in Lisbon today, to evaluate whether Portugal will be able to pay back its bailout loans - or whether it might need even more international help.

For NPR News, I'm Lauren Frayer.

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