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Europe

Portugal cuts budget deficit to lowest level in 4 decades

Associated Press
Published | Updated
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FILE- In this Friday, Feb. 5 2016 file photo, Portuguese Finance Minister Mario Centeno listens to journalists' questions during the presentation of his government's 2016 state budget, at the finance ministry in Lisbon. After calling a news conference to explain his widely criticized handling of a state-owned bank appointment, Centeno earned public statements of support from the prime minister and president, Tuesday, Feb. 14, 2016. (AP Photo/Armando Franca, File) (The Associated Press)

LISBON, Portugal – Portugal's government has proved its critics wrong, slashing the debt-heavy country's budget deficit to its lowest level in more than 40 years despite warnings that its anti-austerity policies could spell financial disaster.

Finance Minister Mario Centeno said Wednesday the deficit last year was no higher than 2.1 percent — well within the 2.5 percent ceiling stipulated by European authorities.

Some other eurozone countries expressed alarm when the center-left Socialist government, with the support of the Communist Party and Left Bloc, took power in 2015 on an anti-austerity platform.

Portugal needed a 78-billion euro ($82 billion) bailout in 2011, after recording a deficit of more than 11 percent the previous year, and eurozone officials feared it could go into another debt spiral under the Socialists.