Portugal set to vote for centre-right government
The election will end a period of political uncertainty that started with the collapse of the Socialist government in March and led to Portugal becoming the third country in the eurozone to seek a bailout after Greece and Ireland.
With unemployment at its highest level in three decades, the Portuguese are expected to reject caretaker prime minister Jose Socrates and turn to opposition centre-right Social Democrat Pedro Passos Coelho.
Passos Coelho said Portugal had to stick to the bailout terms to regain market confidence and return to growth.
He said: “You know that we now have a very difficult period for the next two or three years. But I’m sure that we will make the necessary change and Portugal will achieve new prosperity with economic growth in the next two to three years.
“In the markets, we will only have confidence if we are committed to the memorandum of understanding reached with the European Union and the International Monetary Fund.”
The latest opinion polls gave Passos Coelho around 37% support compared with 31% for Socrates, which will most likely mean the Social Democrat will need to team up with the smaller right leaning CDS party, which has 12% support, according to the opinion polls, to form a majority.
Eurasia analyst Antonio Barroso said that such a right-leaning coalition government was the most likely election outcome.
“This would be the most straightforward option if the Social Democrats and CDS can secure an absolute majority between them.
“Both parties are strongly committed to the implementation of the bailout conditions and would easily negotiate a common economic program,” he added.
The formation of a centre-right government would be welcomed by investors, who lost faith in the country in the past few months, dumping its bonds and sending borrowing rates to euro-era highs.
Such a government should be able to quickly enact reforms and austerity measures included in the bailout, such as sweeping tax hikes and deep spending cuts, to ensure the country reduces its large debts.
President Anibal Cavaco Silva addressed the nation late on Saturday, asking people to vote and calling the election “particularly decisive”, because Portugal “is submerged in a deep economic and social crisis”.
Portugal’s economy is expected to contract 2% both this year and next, raising tough challenges for any incoming government as the disposable incomes of the Portuguese decline and austerity takes its toll.
So far there have been few strikes and protests against the austerity, unlike in Greece and neighbouring Spain, but as the country’s recession deepens that is expected to change.
