The Organization for Economic Cooperation and Development (OECD) has praised a fiscal consolidation plan from Portugal, predicting it will lead to economic and jobs growth.

According to the Paris-based agency, proposals to reduce the budget deficit from 9.3 per cent in 2009 to less than three per cent of GDP by 2013 have won its support.

Portugal is planning to leave counter-cyclical employment and social support measures in place during this year, as "recovery remains fragile", while efforts will be made to "make the tax system more broad-based" and minimise the effects of plans on economic growth.

OECD secretary-general Angel Gurria praised the government's consolidation programme as going "in the direction of maintaining market confidence, supporting growth and ensuring fiscal sustainability".

A November economic outlook report by the body on Portugal emphasized the importance of fiscal consolidation and forecast a rise in unemployment and in the budget deficit this year, issues the new proposals aim to address.