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Portugal opposition wants bailout revamp

Friday, July 12, 2013 - 02:13

July 12 - Portugal's prime minister says he's committed to reaching a cross-party deal to conclude the country's 78 billion euro bailout programme by June 2014 - but in a fresh hurdle for the crisis-hit government, the opposition is demanding the terms of the bailout be renegotiated. Joanna Partridge reports.

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Conciliatory words from Portugal's Prime Minister. Pedro Passos Coehlo says he's ready to overcome differences with his coalition partner and the opposition Socialists to resolve the country's political crisis. (SOUNDBITE) (Portuguese ) PORTUGAL PRIME MINISTER, PEDRO PASSOS COELHO, SAYING: "To reach a deal it is sufficient for us to concentrate on the country's needs and on the common needs of the Portuguese. So let's make a deal that corresponds to everyone's wish, which is to successfully conclude the assistance programme in June 2014 and guarantee that Portugal in a post-troika future never again has to suffer a crisis like the one that hit us in 2011." The opposition Socialists say they'll help to resolve the crisis, but they want to renegotiate the terms of the country's 78 billion euro bailout. They say the government's austerity policies have failed - and want to focus on boosting growth instead. It follows the near collapse of the government last week after two senior ministers resigned. Then on Thursday President Anibal Cavaco Silva threw the country into disarray by rejecting the Prime Minister's attempts to heal the coalition with a cabinet reshuffle. He called for early elections next year. The political turmoil has forced Lisbon to ask for a delay in the latest regular review of the bailout by its lenders. Instead of starting on Monday, it's been pushed back to late August or early September. That hit Portugal's 10 year bond yields, pushing them up to over 7.8%. The situation in Portugal and other indebted euro zone countries is a worry for investors, says Ian Stannard from Morgan Stanley. SOUNDBITE: Ian Stannard, Head of European FX Strategy, Morgan Stanley, saying (English): "Continued issues at the periphery of Europe are going to remain, and they're still going to I think weigh on the euro over the longer term. But certainly the near term focus is very much going to be on policy, I think, that is going to be the factor which really starts to put the euro back under pressure." Analysts say Portugal's political troubles could delay more austerity measures, which are needed to complete the adjustment programme, and could even force it to request a second bailout. It's in Lisbon's and the euro zone's interests to end the uncertainty as soon as possible.

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Portugal opposition wants bailout revamp

Friday, July 12, 2013 - 02:13