Debt crisis: Portugal to raise taxes to meet austerity targets The new budget measures, which are to be presented to parliament on October 15, were shown to European Commission President Jose Manuel Barroso on Monday. Reassured by the plan, Mr Barroso, a former Portuguese prime minister, said he was in favour of paying out the latest installment of Portugal's €78bn bail-out. Mr Barroso added that he expected eurozone partners to follow suit. The granting of this new slice of aid is contingent on Portugal passing measures worth €4.3bn in the 2013 budget. In a previous effort to meet the requirement, conservative Prime Minister Pedro Passos Coelho proposed a hike in welfare charges paid by employees on their monthly paychecks, a move designed to inject the country's social safety nets with much-needed funds and ease the hiring burden on employers. Mr Gaspar blamed the anticipated increase in unemployment on this abandoned effort to ease hiring costs. Spending cuts and economic reforms have caused a recession, with the economy shrinking by 1.2pc in the second quarter, much faster than the 0.1pc rate in the first quarter. The contraction is expected to reach 3pc for the whole year. Earlier in the day the Portuguese debt agency successfully completed a bond exchange, buying up sovereign bonds set to mature in 2013 and in return emitting new bonds with a 2015 expiry date at lower rates. The Portuguese government has not attempted auctioning bonds outright on the markets since it requested a bailout in Spring 2011 and has only carried out short-term operations. Mr Gaspar said the exchange "without question marks the return of Portugal to the public debt markets."