The governing program offered by Mr. Costa would undo several austerity measures enacted by Mr Passos Coelho starting in 2011 under the country’s three-year €78 billion ($A118.7bn) bailout program. Costa, rather than downplaying this rupture, has celebrated the end of these post-dictatorship conventions, comparing it to the fall of the Berlin wall, and stating that ‘a taboo has ended, a wall torn down, a prejudice overcome’.
Advertisement
SOCIALISTS, communists and anti-capitalists brought down the Portuguese government yesterday after a conservative coalition held onto power for just 19 days. “This is a new political framework; the old majority can not pretend to be what it stopped being”.
In a Tuesday address to parliament, ahead of the vote that toppled him, Coelho had this to say about the plan put forward by his political rivals: “I hope that what we are being promised now for the future doesn’t have to paid in double tomorrow”. Prime Minister Pedro Passos Coelho thus led the briefest coalition in the republic’s history.
The government’s collapse was a political setback for the 19-nation bloc’s austerity strategy demanded by Germany and the others as a remedy for the crisis. While Mr Costa has expressed his full commitment to take Portugal out of the Excessive Deficit Procedure as soon as possible by reducing the public deficit below 3% of GDP, it is not yet clear how this target squares with his proposals (and his allies’): to roll back a few of the public sector wage cuts, unfreeze of pensions, reverse a few privatizations (including the transport systems of Lisbon and Oporto), and cut the Value-Added Tax on a few goods and services.
BNP Paribas analyst Colin Bermingham said the Portuguese president might “need to give the left the opportunity to govern”.
Portugal’s splintered left has united in the cause of fighting austerity, but the Greek example points to a troubled outcome for the nation and the wider Eurozone.
The three parties in the leftist alliance have in the past had hostile relations, however, and will be watched closely for any signs of friction.
Though they don’t have to agree on everything for an administration, but if there are major conflicts over economic and European issues, the government may not last for very long. Portugal’s economy and government finances are still weak.
But investors appeared nervous, with Lisbon’s stock exchange closed down 0.30 percent on Tuesday before the result of the vote was known, after closing down 4.05 percent on Monday.
Bond yields fell slightly after a 20-point rise the previous day. “The next important moment is the president’s decision”. The president can also invite Coelho to continue serving as prime minister until new elections are held after April 2016.
Advertisement
Portugal already missed last month’s deadline to present its 2016 budget guidelines to Brussels.
