Portugal oppposition leader asked to 'immediately' form govt

6th June 2011, Comments 0 comments

Portuguese President Anibal Cavaco Silva on Monday asked the head of the centre-right Social Democrats to immediately start work on forming a new government following weekend polls, without waiting to be officially named prime minbister.

The decision to speed up the usual procedure called for by the constitution should allow the next government -- which will be charged with implementing a demanding 78 billion euro bailout programme agreed with the IMF and EU -- to be sworn in earlier than had been expected.

The Social Democrats (PSD) took 38.6 percent of the vote in Sunday's polls to secure 105 seats in the 230-seat legislature, after only the votes cast abroad, involving four seats in parliament, were left to count.

PSD leader Pedro Passos Coelho said he would immediately seek to form a coalition government with the smaller, conservative CDS-PP which won 24 seats, which would give the two parties a absolute majority in parliament.

"As the Social Democrats won yesterday's elections, electing the most lawmakers, the president instructed Pedro Passos Coelhos to immediately begin work to propose a government solution that has consistent majority support in parliament," the president's office said in a statement.

"Preceding the nomination of the prime minister, these efforts should be carried out as quickly as possible and the results communicated to the president before the publication of the official results of the election."

The final official results of the election, including the overseas vote, will be published on June 15.

The statement was issued after the president met with the PSD leader for more than 90 minutes at his official residence.

Under the Portuguese constitution, the prime minister is nominated by the president according to the electoral results and after all parties with representation in parliament have been heard.

The PSD and the CDS-PP together would have an absolute majority in parliament of 129 seats. They last governed together in a coalition between 2002 and 2005.

Passos Coelho vowed to start enacting the bailout deal "as soon as possible" in his victory speech, adding he was willing to impose more austerity measures to ensure Portugal does not become a "burden" to its creditors.

He campaigned on a promise to "go beyond" the conditions attached to the bailout.

The bailout deal reached last month imposes tight deadlines to impose deep spending cuts and wide-reaching economic reforms aimed at reviving growth and reining in a public deficit that hit 9.1 percent of output last year.

The terms were negotiated in a hurry, without waiting for the outcome of the snap polls sparked by Socialist Prime Minister Jose Socrates' resignation in March after parliament rejected his minority government's latest package of austerity measures.

A delegation from the EU, IMF and European Central Bank will visit Lisbon at the end of July to assess the progress that has been in implementing the bailout programme.

By then the new government will need to have decided what austerity measures to put in place to offset the "significant" reduction in corporate social security contributions called for in the agreement to make firms more competitive.

It will also have to find a buyer for nationalised bank BPN and give up its so-called "golden shares" in listed companies such as former state monopoly Portugal Telecom.

During the second half of the year, parliament must vote for a new package of austerity measures for 2012 as well as key structural reforms to dynamise an economy that has posted sluggish growth for a decade and is expected to shrink by around two percent this year and the next.

To curb the rise in the nation's public debt, which hit 160 billion euros in 2010, the equivalent of 93 percent of GDP, the government will have to speed up the pace of its privatisations, starting with the sale of TAP-Air Portugal and its stakes in power firm EDP and power grid operator REN.

© 2011 AFP

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