LISBON, Portugal (AP) — Foreign inspectors arriving in Lisbon to assess Portugal's compliance with the terms of its bailout agreement face a dilemma.
Portugal has broadly abided by its commitments to slash spending and reform the economy in return for last year's €78 billion ($98 billion) rescue. But falling tax revenue due to a recession means Portugal is likely to miss its budget deficit target of 4.5 percent this year.
That means the bailout lenders may have to grant Portugal more time to meet its deficit goal — and risk inviting requests for similar leniency from other bailed-out eurozone countries.
Or the inspectors might demand more austerity, which could drive the weak Portuguese economy deeper into trouble.
The inspectors began meetings with local officials Tuesday as part of a regular quarterly assessment.