Portugal’s center-right Social Democrats (PSD) began forming a coalition government with their traditional rightist allies yesterday, calling on Portuguese to muster their courage as a tough austerity plan is rolled out.
The PSD’s convincing victory on Sunday with 39 percent of the vote ended months of political uncertainty following the collapse of the minority Socialist government in March, when it failed to pass its latest austerity package.
Submerged in an acute debt crisis, Portugal received a 78 billion euro (US$113.9 billion) bailout last month from the EU and IMF. The terms include higher taxes and tough spending cuts that will weigh on an economy already deep in recession.
Photo: AFP
“I will have important contacts today that have to be made to form the government, namely contacts with the CDS-PP,” the Social Democrat leader and Portuguese prime minister-in-waiting Pedro Passos Coelho told reporters as he left home yesterday.
Paulo Portas, head of the right-wing CDS-PP, had already said he was ready to rule together with the Social Democrats.
The PSD won 105 seats, while the CDS won 24, giving the two parties, which have a record of working together in coalitions, a clear majority in the 230-seat parliament.
This should allow it quickly to enact the reforms and austerity measures included in the bailout, such as sweeping tax rises and deep spending cuts, to reduce Portugal’s large deficit and debt.
Adelino Maltez, a political analyst in Lisbon, said the election “puts Portugal in the normal European groove of center-right governments, which deserves more investor confidence.”
He said the PSD and CDS-PP should be able to agree on ministerial portfolios quickly, perhaps this week.
However, he said a new government might have a better chance of riding out a popular backlash over the austerity measures if it was broadened out to include the outgoing Socialists, and this might take longer.
“The solution should go via a regime pact with the Socialists, the party that negotiated the bailout. Maybe the government could include one of their ministers, say Luis Amado staying on as foreign minister,” Maltez said.
Analysts say Portuguese President Anibal Cavaco Silva may push for such a solution during talks with the parties this week.
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