02 July 2013

FT: Portugal's Passos Coelho pledges to stay as prime minister

Pedro Passos Coelho said he would stay at his post and work towards a “rapid return to stability” to avert a political and economic crisis that would endanger the country’s €78 billion bailout. However, opposition parties called for an early general election two years ahead of schedule, saying there was no possible solution for the governing coalition. “The country needs a new government with democratic legitimacy”, said António José Seguro, leader of the centre-left Socialists, the main opposition party.

The prime minister was speaking hours after his government was rocked by the resignation of Paulo Portas, foreign minister, less than 24 hours after Vítor Gaspar had quit his post as finance minister. “This is the clearest indication yet that the rapidly souring politics of economic reform in Portugal are undermining the credibility of the country’s bailout programme”, said Nicholas Spiro, a sovereign debt analyst. “Politically speaking, Portugal’s adjustment programme is collapsing.”

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In a statement on 3rd July, the Commission President said:

"The European Commission and I personally are following the political crisis in Portugal with very serious concern. The initial reaction of the markets shows the obvious risk that the financial credibility recently built up by Portugal could be jeopardised by the current political instability. If this happens it would be especially damaging for the Portuguese people, particularly as there were already preliminary signs of economic recovery.

This delicate situation requires a great sense of responsibility from all political forces and leaders. The political situation should be clarified as soon as possible.

We trust that Portuguese democracy will deliver a solution ensuring that the sacrifices the Portuguese people have made until now will not have been in vain."

Press release

© Financial Times