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His appointment as deputy prime minister, charged with coordinating economic policy, signals that Lisbon will seek greater leeway from international lenders to soften austerity policies that have strained relations between the two government parties. Mr Portas, leader of the conservative People’s party (CDS-PP), the junior coalition partner, is also to oversee negotiations with the so-called “troika” of lenders – the EU, International Monetary Fund and European Central Bank – which are scheduled to resume on July 15. After a week of crisis that saw Portugal’s bond yields spike, Pedro Passos Coelho, the prime minister, announced Mr Portas’s promotion as part of a coalition deal aimed at averting an election two years ahead of schedule and keeping the rescue programme on track.
Mr Portas is to remain in charge of framing wide-ranging reforms to the welfare state and civil service that will involve €4.7 billion in spending cuts and potentially laying off tens of thousands of state workers.
Overall, the cabinet changes give Mr Portas, whose party has expressed growing reservations over the impact of tax increases on pensioners and small companies, a powerful role in managing the tough reforms needed to complete the bailout programme.
The centre-right government has already said it may have to ask the troika to ease Portugal’s fiscal targets in 2014 after two previous relaxations.
The prime minister said Maria Luís Albuquerque would remain in office as finance minister. It was disagreement with her promotion from Treasury secretary to replace Mr Gaspar that had caused Mr Portas to tender his resignation.
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