IMF says eurozone needs Portugal to stick with its austerity program despite hardship
{{#rendered}} {{/rendered}}Railway workers march under the rain towards the Portuguese economy ministry during a protest in Lisbon, Thursday, Jan. 17, 2013. The workers were protesting against salary cuts, that is as a part of an austerity economic measures taken by the Portuguese government linked to a euro 78 billion ($102 billion) bailout needed in May 2011. (AP Photo/Francisco Seco) (The Associated Press)
The International Monetary Fund is warning Portugal against the temptation to relax its contentious austerity drive, saying any backsliding could undermine the 17-country eurozone's recovery.
The Portuguese government's latest tax hikes are costing many workers the equivalent of at least a month's pay this year. Meanwhile, the economy is forecast to enter a third straight year of recession and unemployment is at a record 16.3 percent.
The IMF contributed to Portugal's €78 billion ($104 billion) financial rescue in May 2011 that spared the debt-heavy country from bankruptcy but demanded cutbacks.
{{#rendered}} {{/rendered}}The IMF said abiding by the loan's terms is needed "to avoid the emergence of renewed stress in the euro area."
It predicted in a report Friday the Portuguese economy will start recovering gradually at the end of 2013.