Portugal adopts 4-year plan to cut state spending

NEWYou can now listen to Fox News articles!

Portugal's Parliament has endorsed a four-year budget plan that places legal limits on state spending in an effort to restore the bailed-out country's fiscal health.

Meager growth and excessive borrowing over the past decade pushed Portugal close to bankruptcy last year, compelling it to ask for €78 billion bailout and adding momentum to Europe's sovereign debt crisis.

The Budget Strategy Document introduces legal caps on public spending, which will be linked to forecast income. The goal is to reduce spending from the equivalent of 50 percent of gross domestic product this year to 43 percent in 2016.

Finance Minister Vitor Gaspar told lawmakers the plan is "a fundamental milestone" in Portugal's economic recovery efforts.

The government used its parliamentary majority Friday to approve the plan, which all opposition parties rejected.