Wednesday, March 23, 2011

FT: Portugal crisis threatens to trigger poll:

We all know the issues with Portugal at mom, but this a handy article as a reminder of all the important names to look out for in this current bout of unrest on the Portuguese front....              

Portugal crisis threatens to trigger poll                                 By Peter Wise in Lisbon
Portuguese opposition parties have refused to back austerity measures drafted to help the country avoid a bail-out, in a rebuff that could trigger both a snap election and an international financial rescue.
The political crisis in Lisbon threatens to dominate a European Union summit on Thursday, at which leaders hope to finalise "a grand bargain" to resolve the eurozone debt crisis.
Portugal’s cost of borrowing hit new euro-eras highs on Tuesday, with the yield on five-year government bonds rising above 8 per cent for the first time. The new austerity measures, designed by the minority Socialist government with input from the European Central Bank and the European Commission, the EU’s executive branch, are intended to reassure nervous markets that the country will meet its debt payments.
Senior political figures appealed to Aníbal Cavaco Silva, Portugal’s conservative president, to intervene to ensure the country was not left without an effective government ahead of the summit.
José Sócrates, the embattled prime minister, has refused to follow Greece and Ireland in seeking a financial rescue package. But opposition parties have refused to back a fourth austerity package, which could force the government to resign and trigger a snap election.
Pedro Passos Coelho, leader of the centre-right Social Democrats (PSD), the main opposition party, rejected a government offer for talks on the measures, saying an early general election was "inevitable".
Fernando Teixeira dos Santos, finance minister, said a political crisis would make it difficult for the government to finance its debt and could force Portugal to seek a financial rescue from the EU and International Monetary Fund.
Even if Mr Sócrates does resign on Wednesday, he would still be expected to attend the EU summit as Portugal’s outgoing prime minister in a caretaker capacity. It would then fall to Mr Cavaco Silva to decide whether to call an early election, which could take two months to prepare, or invite other parties to form a new government.
Marcelo Rebelo de Sousa, a senior PSD leader, called for a "grand coalition" between his party, the Socialists and the small conservative Popular party to ensure the strongest possible commitment to a credible deficit-reduction programme.
Mr Passos Coelho added that "a broad coalition for change" resulting from an early election would lend greater authority to Portugal’s deficit-reduction programme and provide "unfailing support to structural reform program aimed at fiscal consolidation, public debt reduction and economic growth".
The PSD has committed itself to the same fiscal targets as the Socialist government, which aims to cut the budget deficit to 4.6 per cent of gross domestic product this year and 3 per cent in 2012, down from 7 per cent last year.
But the party, which enjoys a lead in the opinion polls, said it could not support the government’s latest austerity measures because they were likely to prove "limited and ineffectual" and demanded unjust sacrifices from "the most vulnerable members of society".
Mr Sócrates, who has been in office for six years, has made it clear that he would fight for re-election as prime minister in the event of an early poll.

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