Portugal announced additional spending cuts and reforms on Friday to increase its deficit-cutting efforts by 0.8 percent of gross domestic product this year and provide extra certainty that it will reach its target of a 4.6 percent fiscal gap.

As an additional precaution for 2011, the consolidation measures will be strengthened, allowing us to have an additional effect of 0.8 percent (of GDP), Finance Minister Fernando Teixeira dos Santos told reporters in Lisbon, shortly before a key euro zone summit designed to help resolve the debt crisis.

The minister spelled out a raft of measures to achieve the extra cuts, including spending cuts on health services, social welfare and delaying infrastructure projects.

Teixeira dos Santos said the government seeks to deepen structural reforms, particularly in the labor market, where it plans to cut layoff compensations to 10 days from 30 days and set a maximum compensation payment limit worth 12 months of work.

The ongoing consolidation effort, now complemented with additional measures for 2011, has to be followed by measures in the following years given the demand targets set, he said.

The government targets cutting the budget deficit to 3 percent of GDP next year, and then further to 2 percent in 2013.

(Reporting by Sergio Goncalves; writing by Shrikesh Laxmidas, editing by Mike Peacock)

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