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Salvation pact: Political crisis puts 2014 State Budget at stake

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Prime Minister Pedro Passos Coelho and Minister of Finance Maria Luís Albuquerque during a debate in Parliament (Photograph: Portuguese Government/All Rights Reserved)

The €4.7bn in state spending cuts might never happen due to the lack of consensus among the main political parties currently discussing a “national salvation pact” which could put the 2014 State Budget at stake, writes Jornal de Negócios.

The representatives of the three Portuguese main parties – the ruling PSD party, the minor coalition CDS party and the main opposition socialist PS party – are now trying to forge an agreement to solve the political crisis and discussions include not only the post troika period but also the 2014 State Budget, the financial daily reports.

Negócios adds that cuts of €4.7bn agreed with the ‘troika’ of international creditors to be made by 2015, including €3.3bn to be made in 2014, are not consensual. Not only the main opposition party PS, but also the minor coalition party CDS-PP and some members of the government and the ruling PSD party are against the huge cuts, fearing it can steepen the economic recession and inflict tough social suffering.

Without an agreement between the main parties, the country must renegotiate new conditions with the European Union, writes the financial daily.

The representatives of the three main parties have gathered twice since the President Aníbal Cavaco Silva demanded a “national salvation pact” on Wednesday to rule the country in what will basically be a caretaker government until the end of the bailout programme, in June 2014, followed by early elections. The parties have to forge an agreement by 21 July and none of them rule out a possible agreement even though most political analysts say it will be hard to achieve.

 

President shortens visit and CDS postpones congress

With negotiations still going on, the President, Aníbal Cavaco Silva, shortened his visit to Selvagens Island, in Madeira, scheduled for this week. The visit is set to begin on Thursday and instead of returning on 20 July, as the media reported, the President will return to Lisbon on Friday, 19 July.

Also the minor coalition party decided on Monday to postpone for the second time in a week its national congress, now scheduled for October after local elections on 29 September.

In the first place, a political process is now in place in which the CDS-PP aims to be a stability factor and so intends to convene in a stabilised political situation and also be itself, in this process, a stability factor”, the party said in a press release.

The CDS-PP had to postpone its annual congress after its leader and Minister of Foreign Affairs, Paulo Portas, resigned causing a political crisis in the Government. The congress was first scheduled to take place on 6 and 7 July, in Póvoa do Varzim, in the north of Portugal, but with the political crisis still ongoing, the party was forced to postpone it again.


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