Portugal’s Constitutional Court rejects parts of government austerity measures

Portugal’s Constitutional Court has rejected four out of nine controversial austerity measures drawn up by the country’s government for the 2013 budget.

The measures, which were rejected by the court on Friday, would have deprived the state of some 900 million euros (1.17 billion dollars) in revenues and savings.

The ruling has dealt a blow to government finances, but is unlikely to derail reforms two years after the country received a bailout from European lenders.

The whole package of new austerity measures introduced in the 2013 budget is worth about five billion euros and includes the largest tax hikes in Portugal.

In response to the ruling, the government has called an extraordinary cabinet meeting for Saturday.

Portugal is the third country after Greece and Ireland to succumb to serious financial troubles in the eurozone debt crisis and to seek funding assistance.

The European Union, the European Central Bank (ECB), and the International Monetary Fund (IMF) granted Portugal an emergency loan worth 78 billion euros (102 billion dollars) after the country’s borrowing costs soared to unsustainable levels in 2011.

In return, the Portuguese government imposed a series of deeply unpopular austerity measures to meet the conditions of the international bailout of its economy.

Portugal’s main opposition party – the Socialists – has accused Prime Minister Pedro Passos Coelho’s government of applying austerity measures at any cost and plunging millions of Portuguese people into poverty, while failing to meet growth and deficit targets.

Portugal is grappling with its worst recession since the 1970s. The country is bracing for a record 18.2 percent jobless rate this year, up from last year’s 16.9 percent.