Finance Minister Vitor Gaspar, the architect of Portugal's austerity drive under an EU/IMF bailout, resigned in a potential blow to its planned exit from the rescue programme. (Includes statement by VP Rehn.)
Widely blamed by the Portuguese for the painful tax hikes and wage cuts since the mid-2011 deal, Gaspar said in his resignation letter he quit because of the growing erosion of public support for the adjustment plan.
His departure marks the biggest political casualty from the country's debt crisis since the previous Socialist government collapsed in the spring of 2011 after it was forced to request the bailout. The centre-right Social Democrats have governed since then in a coalition with the rightist CDS.
Gaspar will be replaced by Treasury Secretary Maria Luis de Albuquerque, who helped engineer Portugal's still fledgling return to bond markets earlier this year. Lisbon hopes to regain full market access by mid-2014 when the bailout ends. Failure to do so may require a new rescue package and yet more austerity.
EU Economic and Monetary Affairs Commissioner Olli Rehn said he was confident Albuquerque would show "similar commitment and determination" to Gaspar. Rehn said in a statement that it was essential to maintain the pace of reform, but that he had no doubt Albuquerque would "ensure a seamless transition".
The main opposition Socialists were quick to say the resignation was evidence of the government's impending collapse and reiterated their call for a new election. Analysts, however, said a snap ballot would be unlikely as the ruling coalition has the support of conservative President Anibal Cavaco Silva and a solid majority in parliament despite its record low popularity.
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In a statement, VP Rehn said: "I wish to express my deep appreciation for the valuable work carried out by Vitor Gaspar as Portuguese finance minister. He has shown unwavering commitment to the goals of the economic adjustment programme since taking office in June 2011. And he has helped to ensure the adoption of many difficult but necessary measures to restore confidence in the sustainability of public finances, in a very challenging external environment.
I am confident that Maria Luís Albuquerque will show similar commitment and determination. She has a strong grasp of economic policy and has been a key figure working alongside Vitor Gaspar in the Portuguese Finance Ministry through these hard years. I look forward to working with her in her new capacity and have no doubt that she will ensure a seamless transition.
Portugal is approaching the final phase of its programme. Much has been achieved in terms of consolidating public finances, restoring financial stability, and adopting structural reforms for competitiveness and job creation. Yet important challenges remain, not least the need to bring down the very high levels of unemployment. That is why it is essential to maintain the tempo of reform and to work to broaden support for the programme, which will enhance international confidence in the achievement of its objectives. Europe has confirmed its solidarity with Portugal through the recent decision to extend the EFSM and EFSF loan maturities. The Commission will continue to support Portugal's efforts to return to sustainable growth and achieve full market access."
Commission Statement
See also Open Europe's blog: Portugal's Finance Minister quits: A bolt out of the blue? Not really...
© Reuters
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