Portugal cuts deficit, says rejecting austerity brings gain

Portugal's statistics agency says that the country's budget deficit fell to 2.1 percent last year, with the government saying the drop proved critics of its anti-austerity measures wrong.

The National Statistics Institute said Friday the deficit dropped from 4.4 percent in 2015 due to spending cuts and higher tax revenue. The 2016 deficit was the lowest in more than 40 years.

When the center-left Socialist government took power in 2015 its opponents warned that bringing back four public holidays, returning government workers to a 35-hour working week and cutting the sales tax on restaurant meals to 13 percent from 23 percent, among other measures, could spell financial disaster.

Portugal needed a 78-billion euro ($84 billion) bailout in 2011, after recording a deficit of more than 11 percent the previous year.