Portugal's creditors bega a review of the country's 78-billion-euro bailout programme Wednesday, with unions and business leaders united against more austerity measures, warning they put a fragile economic recovery at risk.
The arrival of a team of officials from the "troika" of lenders --the European Commission, the European Central Bank and the International Monetary Fund -- comes just one week after parliament approved a budget for 2014.
The budget aims to save 3.9 billion euros ($5.3 billion), partly through cutting public sector salaries and pensions, provoking street protests.
Portugal secured a 78-billion-euro ($104 million) economic bailout from the "troika" in May 2011 under a programme that is slated to end in June next year.
Payment of the next instalment of loans of 2.7 billion euros depends on a successful review of the country's progress in implementing economic reforms agreed in exchange for the aid.
But while all three of Portugal's main political parties backed the initial bailout agreement, Prime Minister Pedro Passos Coelho's centre-right government has faced a growing backlash agaist austerity measures.
"It is not by reducing salaries, as some elements of the troika suggest, that we will revive the economy," the head of the Portuguese Industry Confederation, Antonio Saraiva, warned ahead of the visit of the creditors, adding that such measures would lead to "a brutal drop in household consumption".
IMF experts have backed a reduction in Portugal's minimum wage of 485 euros for youths to encourage companies to hire unemployed workers and reduce a jobless rate of 15.6 percent.
"A policy of lower salaries is unacceptable. We hop that the government will make this point to the troika," Lucinda Damaso, the head of Portugal's UGT union, the country's second largest, said Monday during a meeting with government officials.
Portugal has so far received 71.4 billion euros of its bailout and the government has repeatedly insisted that it will not need more help when the programme ends in June like Greece did when it got a second bailout.
But doubts remain over the government's capacity to put in place the austerity measures included in its 2014 budget.
The budget still needs approval from the Constitutional Court, which triggered a political crisis once before by rejecting tax measures intended to meet bailout terms, and is due to rule in the coming weeks on the proposed cuts to the pensions of public sector workers.