he Prime Minister Pedro Passos Coelho during his speech in the biweekly debate in Parliament (Photograph: Mário Cruz/LUSA)

Portugal will not seek a second bailout and the troika will not stay in the country longer than expected, Prime Minister Pedro Passos Coelho said during a debate in parliament where he pushed for a European banking union.

We will not ask for a second bailout, we will not have the troika here longer than needed and we will cover the financial gap” with tax revenues, Passos Coelho said Friday, quoted by financial newspaper Jornal de Negócios.

The leader of the centre-right coalition government added that the austerity measures included in the 2013 state budget aim to help Portugal “get rid of the troika sooner.”

During his speech, Passos Coelho also said it was important to break up the link between banks and sovereign states through a financial union in order to solve the financing restraints to companies and households.

We need to break the link between banks and states, so banks and companies can be judged based on their own merits and not based on their geographic location,” the Portuguese prime minister said.

PM promises to cut state primary expenditure

Portuguese Prime Minister also defended his government’s performance in parliament as speculation swirled around the 2013 budget.

Although still at a preliminary stage and due to be definitively decided on Monday morning prior to its parliamentary presentation that afternoon, the prime minister hailed the cut in state primary expenditure.

We are dealing with a reduction  of around €13bn in state primary expenditure, an amount without comparison over the last four decades in Portugal,” said Passos Coelho.

Having spent €83bn in 2010, the state correspondingly plans to reduce that amount to €70bn in 2013 with that forecast excluding interest payments that the prime minister estimated at €7.5bn and defined as “the largest national burden” due to “irresponsible past policies.”

However, there was no confirmation as to how many jobs will be lost with Passos Coelho stating that he had no numbers about how many would be going across the civil service but said that estimates had been made.

Among the known details to the 2013 budget is the country’s contribution to the European Stability Mechanism, totalling €803m, and a 4% tax surcharge.

The need to balance the books comes after Portugal’s €78bn bailout by the troika of international lenders, which rose to €79bn in the fifth evaluation of the country’s progress following the calculation of exchange rate fluctuations in the International Monetary Fund’s dollar based loan.