Protest
A protester holds a "election now" placard during a demonstration in front of the Portuguese parliament in Lisbon (Reuters)

The Portuguese parliament has approved the country's controversial budget for 2014, enabling the embattled state to slash public sector wages and pensions.

Protesters took to the streets of Lisbon in vein as the Assembly of the Republic voted for €3.9bn ($5.3bn, £3.2bn) worth of cuts.

The move means 600,000 public sector workers earning more than €600 a month will have their pay cut by up to 12% as soon as next year.

"The budget's proposals are difficult, but decisive for our future," said Finance Minister Maria Luis Albuquerque.

"It represents the government's determination to accomplish the adjustment programme in June and start a cycle of lasting consolidation and economic growth."

The budget also outlined pension cuts which could bring savings of €728m.

In addition, the plan sees gross domestic product expanding 0.8% in 2014 - restoring positive economic growth to Portugal for the first time since 2010.

The country also aims to reduce its deficit from 5.5 to 4% of GDP to meet its bailout conditions made by the European Union and the International Monetary Fund.