Portugal’s coalition partners strike deal to heal rift

Reuters, LISBON

Sun, Jul 07, 2013 - Page 13

Portugese Prime Minister Pedro Passos Coelho has reached a deal with his junior coalition partner, the CDS-PP party, to end a rift that had threatened the country’s bailout program, a government spokesman said on Friday.

“The prime minister presented to [Portugese] President Anibal Cavaco Silva a political deal reached with the leader of CDS-PP,” the spokesman said.

Any deal will have to be approved by Cavaco Silva, who is due to meet political parties tomorrow and on Tuesday.

The spokesman did not provide details of the agreement, but said the two parties were to hold a meeting yesterday, to be followed by a statement.

The political crisis began this week after a resignation request by Portuguese Foreign Minister Paulo Portas, who heads the rightist CDS-PP.

The political uncertainty has threatened to upset progress on Lisbon’s 78 billion euro bailout program.

Portas said he disagreed with the appointment of Maria Luis de Albuquerque as finance minister to succeed Vitor Gaspar, who resigned from his post on Tuesday. The CDS-PP leader said the new minister was too close to the policies of her predecessor which have led to Portugal’s biggest economic slump since the 1970s.

Ratings agency Standard & Poor’s revised down Lisbon’s sovereign credit outlook on Friday, changing the outlook to negative from stable, citing the impact of political uncertainty. Its “BB” rating for Portugal is still in junk territory.

Cavaco Silva told a conference earlier on Friday that a negative scenario for the country would be a failure to return to markets as planned next year, which could happen due to internal politics or external events.