(MENAFN - AFP) Bailed-out Portugal announced Monday it had trimmed its public deficit in the first half of 2013, a day after the government's austerity policies were blamed for a local election thrashing.
Portugal cut the public deficit to the equivalent of 7.1 percent of annual economic output in the six months, down from 7.8 percent a year earlier, the National Statistics Institute said.
A combination of a higher tax intake and lower public expenditure curbed the deficit, it said.
But Portugal remained far from achieving its target of lowering the public deficit to the equivalent of 5.5 percent of gross domestic product by the end of 2013.
Reaching the objective, agreed with the "troika" of its bailout creditors, the IMF, European Commission and European Central Bank, will likely become harder as popular resentment grows against state cost-cutting.
The ruling Social Democratic Party (PSD) suffered a stinging defeat in municipal elections Sunday at the hands of the opposition Socialists as voters showed their frustration with the austerity programme.
Prime Minister Pedro Passos Coelho admitted his conservative PSD's "national defeat" as partial results showed it losing control of the Porto, Sintra and Vila Nova de Gaia to the Socialists.
The opposition Socialists also retained power in the capital Lisbon, with an increased share of the vote.
"The PSD has suffered its worst results in municipal elections," the prime minister said, calling the defeat the "price to pay" for the government's austerity policies.
Passos Coelho vowed not be deterred, however.
"As prime minister, I will continue along the path we are on, which is essential in order to overcome the economic crisis and restore confidence and growth for Portugal," he said.
According to partial results covering nearly 90 percent of the constituencies, the Socialists won 36.7 percent of the vote with the Social Democrats garnering just 18.9 percent.
The elections were seen as the first popular electoral test of the austerity policies championed by the two-year-old centre-right coalition government.
In exchange for a 78 billion euro (105 billion) rescue package in May 2011, Portugal's government has imposed tax increases and wage and pension cuts in a bid to balance the budget, aggravating a downturn that has sent unemployment to a record 17.7 percent at the beginning of this year.
Despite growing discontent, the government has largely pushed forward with measures to repair public finances as it seeks further disbursements of bailout funding.
Sunday's election, in which 9.5 million people were eligible to vote, came as auditors from the "troika" visited Lisbon to review its progress and decide whether to release a 5.5-billion-euro loan instalment.