Fresh austerity measures proposed by bailed out Portugal have won the approval of the country's EU-IMF creditors, the government said on Thursday, though a request to ease deficit goals was refused.

Lisbon had lodged a request to raise its 2014 deficit target to 4.5 percent of national output but "the troika did not come back on its position and will only accept 4 percent" as previously agreed, Deputy Prime Minister Paulo Portas said.

But Portas said the approval of government policies by the so-called troika of creditors "increased Portugal's credibility and brings us nearer to an end" of international oversight.

The creditors meanwhile said in a joint statement that the greenlight from the team of auditors paves the way for the next payment of 5.6 billion euros ($7.6 billion).

This is part of the 78 billion euro rescue package agreed in May 2011.

In exchange for the lifeline, Portugal's government has imposed tax increases and wage and pension cuts in a bid to balance the budget, aggravating a downturn that has sent unemployment to a record 17.7 percent.

Despite growing discontent, the government has largely pushed forward with measures to repair public finances as it seeks further disbursements of bailout funding.

On Monday it said it had trimmed its public deficit in the first half of 2013, a day after the government's austerity policies were blamed for a local election thrashing.

The ruling Social Democratic Party (PSD) suffered a stinging defeat in municipal elections Sunday at the hands of the opposition Socialists as voters showed their frustration with the austerity programme.

But in a sign of optimism, Portugal cut the public deficit to the equivalent of 7.1 percent of annual economic output in the six months, down from 7.8 percent a year earlier.

Portugal remains far from achieving its target of lowering the public deficit to the equivalent of 5.5 percent of gross domestic product by the end of 2013 and the four percent tabled for next year.

Reaching the troika-mandated objective will likely become harder as popular resentment grows against state cost-cutting.

The government measures are intended for the 2014 budget, which is due to be finalised by October 14, and must meet the approval of the country's constitutional court that has struck down earlier austerity proposals.

The government also said Thursday growth in 2014 would be better than expected, expanding 0.8 percent instead of 0.6 percent as earlier forecast.