Portugal's Socialist Party back in government, "It's time to get down to work"

24 November 2015

antoniocosta Portugal's president today named the leader of the Socialist Party, António Costa, as the next prime minister.

Costa’s appointment ends weeks of political impasse and creates a socialist government in a fragile collaboration with the country’s left wing parties, including the hard-line communists.

Yesterday, the President of the Republic, Aníbal Cavaco Silva, asked for written agreement from António Costa that he and the left wing parties would continue to accord with Portugal’s international commitments to the EU.

In the six point list, Cavaco Silva insisted there be no meddling with the Stability and Growth Pact, the Budgetary Treaty, the European Stability Mechanism and the participation of Portugal in the Economic Union and Monetary and Banking Union.

Costa has been able to get agreements from all-but-one of the left wing parties, keen as they all are finally to get a chance to influence government policy.

As expected, the Communist party would not agree to the president’s request for compliance but the deal still went ahead.

The president's statement today reported that he noted Costa’s reply to the six areas of concern and naming the Socialist Leader as prime minister, adding that continuing with a caretaker government was not in the national interest and served only to continue the uncertainty over Portugal’s political leadership.

The Socialist Party’s electoral platform is to ease austerity by increasing family income through tax cuts; also to help the poorest in society who have been left behind during the right wing’s years of tax hikes.

By increasing family spending power, Costa aims to revive the small business sector which has been relentlessly punished with tax rises and additional bureaucratic burdens in the name of Troika compliance.

Whether Costa can carry off the trick of inflating the economy while at the same time paying off Portugal’s debt interest and capital, remains to be seen and many expect a move to renegotiate international loans to take advantage of current low interest rates.

Late activity on Portugal’s stock market reflected relief rather than panic as shares eased marginally and bond interest rates rose fractionally.
Costa’s leadership soon may be tested to the full as left wing parties are in a position to disrupt the socialist agenda and cause havoc for the recently arranged, and unprecedented, alliance.

António Costa said he expected the government to be sworn in later this week,

"It's time to get down to work... the country is in a very difficult, fragile situation,"

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