UPDATE 1-Portugal opposition PSD stands by deal to pass budget

* PSD confirms will stick to pact allowing budget passage

* PM says political stability hinges on passage

(Adds quotes, background)

LISBON, Feb 10 (BestGrowthStock) – Portugal’s largest opposition
party, the centre-right Social Democrats (PSD), remains
committed to its promise to allow the passage of this year’s
budget by abstention, PSD leader Manuela Ferreira Leite said on
Wednesday.

“PSD understands that it has to make the budget passage
viable not just because of the budget deficit … but in the
name of the national interest,” she said after Prime Minister
Jose Socrates presented it to parliament.

If the budget is not passed, analysts say the minority
Socialist government may be forced to resign.

Portugal is facing intense investor pressure to cut its
budget deficit and public debt as they fear weakness in public
finances could undermine recovery from the global crisis and
spread the fiscal crisis in Greece to other euro members.

Socrates told parliament “political stability and also the
credibility of macroecenomic policy” hinged on the budget’s
approval.

The parliament will vote on the budget bill as a whole on
Thursday, after which the bill will go to parliamentary
commissions to consider the details.

The final vote is scheduled for March 12.

PSD’s abstention is enough for the ruling Socialists, who
have 97 seats in the 230-seat house, to pass the budget.

The draft budget calls for the budget deficit to be cut to
8.3 percent of gross domestic product this year from 2009’s 9.3
percent, while the government has also pledged to Brussels it
will bring the fiscal gap below 3 percent by 2013.

“The budget approval is a national requirement, which puts
us on track to levelling public finances and reaching a deficit
below 3 percent in 2013,” Socrates said, adding that “the path
will not be an easy one”.

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(Reporting by Andrei Khalip, Shrikesh Laxmidas, editing by Mike
Peacock)

UPDATE 1-Portugal opposition PSD stands by deal to pass budget