The international lenders have agreed to ease bailout terms for Portugal to meet its public deficit target of 5.5 percent of its GDP this year against previous goals of 4.5 percent, Finance Minister Vitor Gaspar told a news conference on Friday.

Gaspar told journalists that Portugal's public deficit target will be 4 percent in 2014 instead of 2.5 percent, which will be the target in 2015.

This is the second time that the deficit targets have been revised, the same revisions occurred under the fifth review of the Troika comprising the European Union, the International Monetary Fund (IMF) and the European Central Bank in September 2012 when the deficit was 6.6 percent of GDP due to the fact that Eurostat refused to factor in the proceeds from the sale of Portugal's Airline ANA.

Gaspar said that the Portuguese economy contracted 3.2 percent last year and is expected to shrink 2.3 percent in 2013. The unemployment rate is estimated to climb to a record 18.5 percent in 2014, he added.

Gaspar admitted that the IMF and the European Commission agreed to extend the term until 2015 but the government preferred to "make an effort to frontload cuts and focusing reform at an early period in 2013 and 2014" but as the economy was worse than expected, the state and the Troika decided to "refocus the bulk of the reform in 2014 and 2015 and apply only a small part of it this year."

"Portugal's bailout program remains broadly on track and its external adjustment better than expected despite difficult economic conditions," the Troika said Friday in a statement on its seventh mission review of the adjustment program which concluded earlier this week.

Under a 78-billion-euro bailout agreement with the Troika in May 2011, Portugal has been implementing a harsh austerity policy which has sparked widespread protests across the country in recent months.