Portugal finmin confident of fiscal targets-INTERVIEW-UPDATE 1

Trade the News

Friday September 10, 2010 07:22:11 AM GMT

* Confident of fiscal deficit target of 7.3 pct of GDP

* Further cutting to 4.6 pct of GDP in 2011, 2.8 pct in 2012

* To reduce tax exemptions to lift revenues, cut spending

(Adds details, quotes)

By Lee Chyen Yee

HONG KONG, Sept 10 (Reuters) - Portugal is confident of cutting the country's fiscal deficit to 7.3 percent of GDP in 2010, and further reducing that to 2.8 percent in 2012 due to measures to trim spending and lift revenues, the country's finance minister said.

Portugal has promised to cut its budget deficit from last year's highs of 9.4 percent to ease investor concerns about its public finances as Europe reels from debt problems.

"To me I have some kind of a deja vu sensation. I've lived through that already three, four years ago and we did it. So I'm pretty confident we can do it again," Finance Minister Fernando Teixeira dos Santos told Reuters in an interview on Friday.

"We have announced major revisions on our personal tax system that will reduce several deductions and benefits that people have now, which are highly costly for the treasury," Teixeira dos Santos during a visit to Hong Kong.

He said the exemptions to be reduced were related to healthcare, education and housing expenditures.

His comments on fiscal deficit targets echoed those made by State Budget Secretary Emanuel dos Santos, who said on Thursday that decelerating public spending would help Portugal achieve its budget deficit target for this year. [ID:nLDE68819I]

In July, the government introduced a series of austerity measures such as higher taxes and spending caps, which helped decelerate public spending.

Portugal's state spending rose 2.7 percent in from January to August, easing from a 3.8 percent increase in the first seven months of the year.

Teixeira dos Santos expects the growth to ease through the rest of the year, which will help improve market sentiment.

"We expect the rate of growth of expenditure...will be much lower until the end of the year," Teixeira dos Santos said.

(Editing by Ron Askew)

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