Portugal is "on the right track" in meeting economic reform targets set by its international creditors in exchange for rescue funding, IMF chief Christine Lagarde said in an interview released Saturday.
"The programme is on the right track. A significant part of fiscal adjustment has been carried out," Lagarde told the Portuguese weekly, Expresso.
While noting high unemployment and remaining risks due to the continuing crisis, Lagarde said she was "very confident."
"The Portuguese authorities and people of Portugal have been extremely courageous and firm in carrying out tough and painful reforms," she said.
Portugal, which obtained a 78 billion euro ($102 billion) bailout from the European Union and International Monetary Fund in May 2011, in exchange agreed a three-year reform programme that has thrown the country into recession and sent unemployment soaring to a record 16 percent.
"We are of course very worried by the rise in unemployment but we are working with the authorities and our European partners to ensure that structural reforms help in creating jobs and lead to growth," Lagarde said.
"However now that the work is two-thirds through, the main aim must be to complete the adjustment programme," she added.
The country's centre-right coalition government in November adopted a tough belt-tightening budget that included wide-ranging tax hikes.
In an announcement this week, President Anibal Cavaco Silva said he had asked Portugal's highest court to decide whether the 2013 austerity budget was constitutional.
"The execution of this budget will bring about lower income for citizens through higher taxes and lower social payments. Everyone will be affected, but some more than others, which raises doubts on the fairness of redistribution efforts," he said.