Portuguese Prime Minister Pedro Passos Coelho on Thursday stressed the need for urgent measures to tackle the "unprecedented challenge" facing the country's economy, announcing a new tax and the acceleration of his privatization programme, according to dpa. Conservative Passos Coelho, whose government was sworn in 10 days ago, faces the task of implementing a bailout programme agreed with the European Union and the International Monetary Fund (IMF). The two institutions granted Lisbon 78 billion euros (113 billion dollars) in loans after its borrowing costs rocketed. Earlier this week, Passos Coelho announced a government programme based on spending cuts and privatizations, pledging to go even further than the EU and IMF required. Measures announced Thursday included an extra tax, amounting to a 50-per-cent cut to the Christmas bonus Portuguese workers receive at the end of the year. The bonus amounts to one month's extra salary. The tax, which will only be applied this year, should bring about 800 million euros to state coffers, Passos Coelho said during a parliamentary debate on his government programme. The government will also sell its stakes in the electricity company EDP and in the National Electricity Networks (REN) in the third quarter, he said. The initial plan had been for the government to start entirely privatizing the two companies in the end of the year. The government controls 25 per cent of EDP and 51 per cent of REN, which is responsible for transporting and distributing electricity in Portugal. Passos Coelho aims at cutting the budget deficit from 9.1 per cent in 2010 to 5.9 per cent this year. In the first quarter, the deficit still stood at 7.7 per cent.
