Portugal may get more leeway on its efforts to reduce the budget deficit under an EU/IMF bailout, a newspaper reported on Wednesday, after the prime minister vowed to protect the country from excessive austerity.

European Union and International Monetary Fund officials are in their third week of talks in Lisbon after Portugal became the third euro zone country after Greece and Ireland to request international aid, estimated at 80 billion euros.

Caretaker Prime Minister Jose Socrates -- campaigning ahead of an election on June 5 -- said in an interview on Tuesday that he would fight for a plan which does least harm to the country during the bailout negotiations.

But officials have generally remained tight-lipped about what is being discussed in the talks and Socrates said that the negotiations for a deal -- which must also be approved by the opposition -- have to be conducted with discretion.

Business paper Jornal de Negocios said the sides have discussed delaying Portugal's goals for cutting its budget deficit -- currently those are 4.6 percent of gross domestic product this year and 3 percent next year.

The paper said only that it had learned the delay was on the table, although it also cited the leader of Portugal's second-biggest union saying he had been told of the possibility during a meeting with the head of the European Commission team.

At the meeting, the head of the team said Portugal only has to meet the 3 percent deficit target in 2013, adding clearly that it does not have to be next year, UGT Secretary General Joao Proenca told the paper.

Portugal has also twice in the last month raised its deficit figure for 2010 to conform with EU methodology, putting the deficit at 9.1 percent of GDP, compared to a goal of 7.3 percent.

Jornal Negocios said the upward revisions have forced the so-called EU/IMF troika to consider allowing Portugal to hit the 3 percent deficit target only in 2013 to ensure the country's fiscal consolidation efforts remain credible.

HANDS TIED

Socrates resigned last month after his minority Socialist government's austerity measures were rejected by the opposition.

Ahead of the snap general election, he is leading the talks with the bailout team and also coordinating efforts to obtain approval for the aid package from other parties, particularly the main opposition Social Democrats (PSD).

Given the nature of the talks, Socrates and PSD leader Pedro Passos Coelho have been left to run an election campaign with their hands tied in terms of promises.

The Socialists will later on Wednesday present their election manifesto, with analysts expecting little in the form of concrete pledges and much in terms of vague promises to defend the country from an excessively painful package.

Filipe Garcia, head of Informacao de Mercados Financeiros consultants in Porto said the move to widen the budget consolidation timetable would not come as a surprise.

I think it is perfectly possible. We've seen with the case of Greece that it is not worth imposing an excessively tough timetable that cannot then be met by the country, he said.

It's not a case of the measures being softer, just that the timetable may be widened so that they effectively lead to a real convergence in the terms of fiscal consolidation, Garcia added.

(Reporting by Shrikesh Laxmidas; editing by Patrick Graham)

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