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Constitucional Court Rejects Austerity Measures

Constitutional court rejected austerity measures included in Lisbon's 2014 budget as part of the centre-right government's ongoing cutbacks after exiting an international bailout two weeks ago.
The country's highest court rejected three out of four measures, which have been opposed by the leftist opposition party, including wage cuts for public employees.
The judges also rejected a five per cent levy on unemployment benefits and a six percent levy on health payouts, along with controversial cuts to widows' pensions.
The court did, however, approve a measure to reduce supplementary pensions payouts in the public enterprise sector.

The secretary general of the main opposition Socialist party, welcomed the ruling and said called for the intervention of President.

The decision comes two weeks after Portugal exited a three-year international bailout programme. But the economy remains fragile, contracting a 0.7 per cent in the first quarter, sending alarm bells ringing. While public deficit has been halved to 4.9 per cent since the bailout began, Portugal's overall debt continues to balloon, reaching 129 per cent of output. Prime Minister whose government recently survived a no confidence motion presented by the Communist Party, said earlier Friday that he "cannot commit to not raising taxes to the extent that I do not know if this is necessary." Portuguese media predicted the government may increase sales tax (VAT) from 23 to 25 per cent to compensate for the shortfall created by the court's decision.

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