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Monday, 17 March 2014 | MYT 9:20 PM

Portugal opposition leader to meet PM on budget pact

LISBON (Reuters) - The head of Portugal's opposition Socialists has agreed to meet the centre-right government on Monday to discuss plans to shrink the budget gap after the country's bailout, but his spokeswoman stopped short of saying he would agree to a cross-party deal.

The government is keen to show investors Portugal can stand on its own two feet after the rescue package comes to a close in May, and that its commitment to budget consolidation will not be derailed by next year's elections, whatever their outcome.

After Lisbon exits its bailout by the European Union and the IMF, its finances will still be bound by deficit reduction targets set by the 2012 European Union fiscal stability treaty.

Prime Minister Pedro Passos Coelho invited Socialist leader Antonio Jose Seguro last week to discuss post-bailout plans that would include a medium-term budget strategy.

"The leader of the Socialists communicated to the prime minister that he will fulfil his institutional duty and meet with the prime minister, as is normal in a consolidated democracy," a spokeswoman for the Socialists told Reuters on Monday.

The centre-left Socialists have supported the European fiscal stability treaty but say budget consolidation should be based on growth and not the spending cuts defended by the government.

Despite the gaping differences in approach, the opposition party has recently shown itself more open to dialogue.

An agreement between the government and the Socialists could ease some economists' fears that Portugal might need a further loan from creditors after the bailout.

Portuguese yields are trading near four-year lows as confidence rises that the country can exit the bailout smoothly.

(Reporting By Sergio Goncalves and Axel Bugge)


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