Bailout creditors to inspect Portugal's new austerity plan after government cuts deeper

LISBON, Portugal – Inspectors from Portugal’s bailout creditors are returning to Lisbon to assess whether the government’s latest austerity measures merit unblocking a due disbursement of rescue funds.

Portugal’s 78 billion euro ($102 billion) bailout two years ago spared the country from bankruptcy, but in return it must slash spending and debt.

In what was seen as a warning over lack of compliance, the bailout lenders last month halted payouts after Portugal’s constitutional Court disallowed some of the government’s pay and pension cuts.

The government drew up alternative measures and last week announced plans to cut another 4.8 billion euros over three years.

Austerity policies are broadly contested, and splits have emerged inside the centre-right coalition government.

The Finance Ministry said in a statement the inspectors will be back in Lisbon on Tuesday.