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UPDATE 1-Portugal PSD tells govt to change budget measures

Published 03/17/2011, 09:11 AM
Updated 03/17/2011, 09:12 AM

* Rejects measures, but says government can change

* Minority govt need support for package

(Adds details)

LISBON, March 17 (Reuters) - Portugal's main opposition Social Democrats (PSD) said on Thursday their refusal to back the minority government's latest austerity measures was irreversible, but hoped the plans would be changed.

PSD leader Pedro Passos Coelho told journalists after meeting President Anibal Cavaco Silva it was not too late for the government to come up with different proposals, especially on pension cuts.

"The PSD cannot give its approval to the measures ... I told the president of the PSD's firm and irreversible position on that matter," Passos Coelho said.

The government rules in a minority and needs to negotiate support for its legislation in parliament. The PSD has previously allowed the passage of its austerity measures. The president often acts as a mediator in impasses.

"We expect that the government knows how to and will change the path so as to not penalise the most unprotected, especially the pensioners," he added.

The Socialist government has already implemented tough austerity measures, including cutting public sector wages and raising taxes. New measures announced on Friday include cuts in spending on infrastructure, social welfare and a special levy that would effectively reduce some pensions.

The Socialist government has warned that a refusal by the Social Democrats to support the latest measures could spark a political crisis, which could force the country to seek a bailout like Ireland and Greece.

Still, Prime Minister Jose Socrates and his government officials challenged the opposition to come up with alternative solutions to guarantee that Portugal meets its budget deficit targets, which they said they were ready to discuss. (Reporting by Axel Bugge and Andrei Khalip; Editing by Toby Chopra)

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