Portugal's new government under pressure

2011-06-06 18:00

Lisbon - Portugal's centre-right Social Democrats had little time to savour their return to power as they started work on Monday on the enormous task of getting a ruinous debt burden under control just as the economy is shrinking once again.

Social Democrat leader Pedro Passos Coelho scored an emphatic win at the ballot box on Sunday, with his party collecting about 39% of the vote compared with 28% for the second-placed Socialist Party, which governed for the past six years.

Passos Coelho is taking over as prime minister in the middle of a financial storm.

The clock is ticking on a long list of painful austerity measures that have to be adopted swiftly in return for a $114bn bailout programme agreed under the former Socialist government.

Any delays or hesitation could jeopardise the agreement that saved Portugal from bankruptcy, as well as complicate European efforts to draw a line under the continent's debt troubles.

"Passos Coelho is going to have the shortest honeymoon period ever," Jornal de Negocios editor Pedro Santos Guerreiro wrote in Monday's edition.

Road to recovery

The new government inherits a record jobless rate of 12.6% and a forecast economic contraction of 4% over the next two years.

The ballot offered encouragement, however, for his efforts to set Portugal on the road to recovery.

Despite the promise of further tax hikes, public sector pay freezes, and pension and welfare cuts, almost 80% of voters gave their support to the three parties that have backed the bailout conditions.

Passos Coelho said he would consult with the smaller, conservative Popular Party - which claimed 12% - about forming a coalition government. Such a deal would ensure him an absolute majority in Parliament that is crucial for the approval of debt-reduction policies and broad social and economic reforms.

A lot is riding on Passos Coelho's negotiating skill. The affable 46-year-old is untested at such a high level, never having held a government post. He is best known as a lawmaker in the 1990s when, in his early thirties, he stood out in Parliament as a promising young politician who wore sweaters during debates instead of the more usual dark suit.

But after graduating in economics from a Lisbon university in 2001 he went into business, becoming an executive at companies in the energy and environmental sectors.

"I hope he will be man enough to govern the country," Lisbon resident Francisca Monteiro, aged 48, told Associated Press Television News.

Slow bureaucracy

Passos Coelho said he was selling no illusions.

"A lot of difficult measures lie ahead," he said on Monday as he left home for a party meeting. "The Portuguese will need a lot of forbearance in coming years."

The new government will have to move quickly on cuts in expenditure and economic reforms before its first scheduled report in July to a team of inspectors from Portugal's European partners and the International Monetary Fund. They put up the money for the bailout and want to see it used effectively.

An immediate concern is improving notoriously slow bureaucratic procedures, identified as one of the obstacles to Portugal's development and which will prevent the government from formally taking office for at least two weeks.

Promised strikes by trade unions over the scrapping of entitlements such as job security will also give the government a rocky ride early in its four-year term.

Portugal has a mountain to climb to engineer the changes that will trigger the growth needed to pay its debts.

Low productivity, weak competitiveness and low levels of education have conspired to constrain an economy which recorded average annual growth below 1% over the past decade.

- AP

Read more on:    pedro passos coelho  |  portugal  |  economy

Read News24’s Comments Policy

24.com publishes all comments posted on articles provided that they adhere to our Comments Policy. Should you wish to report a comment for editorial review, please do so by clicking the 'Report Comment' button to the right of each comment.

Comment on this story
Add your comment
Comment 0 characters remaining

Inside News24


'Zuma's legacy will be judged by Nkandla'

The legacy of President Jacob Zuma is contingent on how he deals with the issue of upgrades to his Nkandla homestead, says Cape Town Archbishop Thabo Makgoba.


Latest elections multimedia

Why Jack Parow wants you to vote on 7 May
The ad the SABC doesn't want to air
Elections 2014 in one cartoon
This year's election posters
  • Thursday Sir Lowry's Pass - 05:35 AM
    Road name: Old Sir Lowrys Pass Road
    TRAFFIC LIGHTS not working at Bezweni Road
  • Thursday Cape Town - 05:35 AM
    Road name: Buitengracht Street
    TRAFFIC LIGHTS not working at Waterkant Street
More traffic reports...

Jobs in Cape Town [change area]

Property [change area]

Travel - Look, Book, Go!

Escape winter, head to Mauritius

Escape winter by spending 7 nights in Mauritius' tropical bliss from R13 215 per person sharing. Includes return flights, airport transfers and accommodation. Book now!

Kalahari.com - shop online today

Get many eggs in one basket!

Gaming bundles: 2 Super Hits games for R99, 3 Disney games for R99 and more + exclusive accessory bundles only available on kalahari.com. While stocks last. Shop now!

25% off bestselling books!

The Real Meal Revolution by Tim Noakes, Jeffrey Archer’s Be Careful What You Wish for, Man’s Search for Meaning by Victor E. Frank and many more titles. Shop now!

Up to 25% off electronics

Buy top electronics and save up to 25%. Such as kalahari.com’s 1# selling product the gobii eReader, Patriot X Porter flash drive, Asus Nexus 7” 3G tablet, Samsung Galaxy SIII, Lenovo G580 Notebook and many more. Shop now!

DStv HD PVR Decoder now R949

The DStv HD PVR Decoder has further revolutionised the television experience with lifelike viewing, sharper images, more vibrant colours and precision picture quality. Now R949, save R550. Offer valid while stocks last. Shop now!

Up to 30% off appliances & homeware

Save up to 30% on appliances and homeware this Easter! Offer valid while stocks last. Shop now.

OLX Free Classifieds [change area]

Samsung Galaxy s4

Mobile, Cell Phones in South Africa, Western Cape, Cape Town. Date October 24

Best bargain in big bay

Real Estate, Houses - Apartments for Sale in South Africa, Western Cape, Cape Town. Date October 25

VW Golf 6, 1.6 Trendline (Excellent condition)

Vehicles, Cars in South Africa, Western Cape, Cape Town. Date October 25

Samsung Galaxy S III 16GB

There are no straight lines in nature. The Samsung  GALAXY...

From R3525.00

I'm shopping for:


You may be good at organising events but they do take their toll on your energy levels. You may need some time out today just to...read more

There are new stories on the homepage. Click here to see them.


Create Profile

Creating your profile will enable you to submit photos and stories to get published on News24.

Please provide a username for your profile page:

This username must be unique, cannot be edited and will be used in the URL to your profile page across the entire 24.com network.


Location Settings

News24 allows you to edit the display of certain components based on a location. If you wish to personalise the page based on your preferences, please select a location for each component and click "Submit" in order for the changes to take affect.

Facebook Sign-In

Hi News addict,

Join the News24 Community to be involved in breaking the news.

Log in with Facebook to comment and personalise news, weather and listings.