Stick to Path of Reforms: Merkel to Portugal

German Chancellor Angela Merkel on Friday urged Portugal to stick to its commitments on economic reforms, as concerns grow that the new Socialist-led government was easing off on budget discipline.

"The predecessor of Prime Minister Antonio Costa led Portugal through difficult times," she noted, urging Lisbon to "do everything to stay on this path" of reforms.

"Together with solid public finances, it would lead to jobs," she told journalists after hosting Costa for talks.

"It is important to keep to this framework," she said, adding that a European Union pact governing countries' budgets was "accepted by all of us and carries certain criteria and clear rules."

Merkel's call came a day after the International Monetary Fund (IMF) urged Portugal to do more to spur economic recovery, and warned the government against loosening its budget discipline. 

"Portugal needs to build on the progress made in recent years in stabilizing the level of public debt through its successful fiscal adjustment," an IMF delegation said following a week-long mission to Lisbon.

The IMF assessment also came as the Portuguese government adopted its 2016 draft budget, a day before the European Commission was due to deliver its verdict on the country's progress towards more austerity.

The EU Commission had earlier asked Portugal to revise its budget to adopt a tighter fiscal stance and was to present its assessment on the changes by Friday, the same day the budget is scheduled to be submitted to the Portuguese parliament.

Portugal received a massive international bailout in 2011 that saved it from defaulting on its debt, but in return the country was required to introduce a string of austerity measures.