Portuguese PM says deficit rise won't affect economic recovery

Portuguese Prime Minister Pedro Passos Coelho on Thursday accused Portugal's Socialist Party Secretary General Antonio Costa of "making up stories" relating to the country's public accounts in the run up to the general elections and said Portugal is still on the right track.

On Wednesday, Portugal's National Institute of Statistics said that the public deficit for 2014 had risen to 7.2 percent from 4.5 percent after failing to recover a loan it made to Novo Banco.

During an election campaign held by the ruling center right coalition on Thursday in Braganca, northern Portugal, Passos Coelho downplayed the impact of bank Novo Banco on the deficit and said it was down to "statistical accounting," according to Portuguese Lusa agency.

He also said that the 4.7 percent deficit registered in the first half of 2015 was "in line with what was predicted in the stability program."

Passos Coelho added that that the government can still aim for a deficit below 3 percent this year, adding that the state budget data to be released Friday would prove that the government's objectives are on the right track.

Portugal's economy returned to growth last year, with Gross Domestic Product (GDP) growing 1.5 percent in the second quarter of this year.

The main opposition party, the Socialist Party, has firmly criticized the government for rigidly following austerity policies under its 78 billion euro bailout program, claiming growth has been achieved at the cost of record high unemployment and precarious working conditions. Endit