Lisbon: Portugal`s main opposition party set conditions on Wednesday for supporting an austerity budget, seeking to shift the onus onto the minority Socialist government to cut public spending further.
Financial markets see Portugal as one of the weak links in the euro zone and view a tight budget as critical to restoring confidence in the country`s finances. Analysts expect a deal to be reached for the budget to pass.
The terms outlined by the center-right Social Democrats (PSD), who initially opposed any tax increase, included a smaller than proposed rise in value added sales tax. They remain far from the government`s proposals.
Other conditions include a suspension of big infrastructure projects and independent monitoring of public finances.
"The conditions have been set, it is up to the government to meet the conditions to approve the budget," PSD secretary general Miguel Relvas told journalists in the early hours of Wednesday after a five-hour meeting of the party`s council.
There was no immediate reaction from the government but Finance Minister Fernando Teixeira dos Santos has said he will consider all proposals that may lead to a budget deal.
"The PSD is showing it does not want to give unconditional support, but the basis for negotiations is there now. I believe that voting down the budget bill on October 29 is out of the question," said Viriato Soromenho-Marques, political scientist with the University of Lisbon.
Socialist Prime Minister Jose Socrates has threatened to resign if the budget is not approved.
"The PSD did show that there is a will to have a budget. The finance minister`s stance was also positive. The cold war continues, with both sides seeking a tactical victory, but there is no alternative to having a budget," Soromenho-Marques said.