Portugal ruling party vows to meet bailout goals after pact talks fail

LISBON Sun Jul 21, 2013 9:13am IST

A political activist paints the word ''Lisbon'' on a wall at a street in Lisbon July 20, 2013. REUTERS/Jose Manuel Ribeiro

A political activist paints the word ''Lisbon'' on a wall at a street in Lisbon July 20, 2013.

Credit: Reuters/Jose Manuel Ribeiro

Related Topics

LISBON (Reuters) - Portugal's ruling Social Democrats (PSD) said on Saturday their coalition government would press on with meeting the country's economic bailout goals after talks on a broader political deal sought by the president collapsed.

Reigniting a three-week-old political crisis, the two centre-right coalition parties and main opposition Socialists broke off talks on Friday on a "national salvation" pact to ensure an EU/IMF bailout stays on track, leaving it to the president to decide how to proceed.

President Anibal Cavaco Silva will make a televised statement on Sunday at 8:30 p.m. (1930 GMT), the president's office said. It would not provide any details.

"We consider there are conditions of stability and cohesion in the coalition, that there are conditions for us to be able to fulfil the memorandum of understanding and lay the basis for sustainable growth and conditions for greater social justice," PSD vice-president Jorge Moreira da Silva told reporters.

"We lament the result of this dialogue process, but the Portuguese people know they can keep counting on us," he said, adding that his party awaited the president's evaluation "with serenity and confidence".

Political turmoil has already forced Lisbon to request a delay in the eighth review of the bailout by its creditors, originally scheduled to start last Monday, until the end of August or early September.

The 78-billion-euro bailout programme and accompanying austerity policies are associated with the worst recession in Portugal since the 1970s.

The centre-left Socialists said the ruling coalition had rejected most of their proposals aimed at ending the austerity policies and renegotiating the terms of the bailout.

The government says abandoning austerity would undermine Lisbon's credibility with lenders and investors.

The crisis, which started as an internal political rift in the ruling coalition and expanded to a debate over the rescue plan and a possible early election next year, has threatened to derail Portugal's planned exit from the bailout and full return to debt markets in mid-2014.

Analysts say the situation remains very uncertain but the president could still avoid an escalation of the crisis, and a likely blowout in Portugal's debt risk premiums, by keeping the ruling coalition in place rather than using his power to dissolve parliament and call a snap election.

He last week declined to say what the alternatives were if there was no cross-party pact.

The government easily defeated a parliamentary no-confidence motion on Thursday and said this had confirmed its legitimacy to govern. (Editing by Sonya Hepinstall)

FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.

  • Most Popular
  • Most Shared

REUTERS SHOWCASE

Coal Sector

Coal Sector

Foreign firms with India units could mine, sell coal - source  Full Article 

Falling Oil Prices

Falling Oil Prices

Indian consumers respond to softer oil, food prices  Full Article 

Pollution Levels

Pollution Levels

Delhi braces for worst air quality this Diwali week.  Full Article 

Stalemate

Stalemate

WTO prepares for crisis talks as India keeps veto on global deal.  Full Article 

Deal Talk

Deal Talk

Smartphone repair company B2X steps up expansion with Indian deal.  Full Article 

Ebola Outbreak

Ebola Outbreak

India to step up travel surveillance to stop any Ebola outbreak  Full Article 

Reuters India Mobile

Reuters India Mobile

Get the latest news on the go. Visit Reuters India on your mobile device.  Full Coverage