Portuguese PM and Socialist opponent clash over austerity as election nears

Reuters News
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Posted: Sep 17, 2015 8:36 AM

By Andrei Khalip

LISBON (Reuters) - Portugal's prime minister and his Socialist opponent clashed on Thursday over austerity policies in their last debate in the Oct. 4 general election race, which remains too close to call.

During the mid-morning radio debate, Prime Minister Pedro Passos Coelho called his Socialist opponent's proposals to simply end austerity unrealistic and said it could lead to a repeat of the 2011 bailout by the European Union and the International Monetary Fund.

"Your demagoguery clashes with reality," Passos Coelho told Socialist leader Antonio Costa.

Passos Coelho's ruling coalition has recently overtaken the Socialists in an opinion poll but the surveys suggest neither side would be able to form a majority government.

Portugal's international bailout program, which it completed in May 2014, has not fired up the degree of mass resistance that produced radical anti-bailout parties in Spain or Greece.

The two top prime ministerial candidates held a television debate last week but no polls have been released since then to indicate whether either pulled ahead.

Socialist Costa, the former mayor of Lisbon, proposes to boost incomes, hiring and growth in order to cut the deficits while scrapping austerity measures and cutting taxes, asserting that would still allow deficits to reduce in line with European rules.

"The problem is that the government's policy is worse than the Troika's," Costa said, referring to the trio of the European Commission, European Central Bank and the International Monetary Fund who provided Portugal's bailout in 2011.

"You went beyond the Troika requirements because you wanted to .... Your vision is that of austerity," Costa said, calling the policy out of date because EU policies have since emphasized promoting growth.

But Passos Coelho said tight budget controls remain essential. "What is happening in Europe is that responsible governments cannot go promising to people what the reality won't allow them to implement," he said.

"When they come to power the reality is that they have to confront problems and have to do exactly what the Portuguese government has done."

The economy climbed out of a three-year recession last year and Portugal has already repaid some of the rescue funds owed to the IMF.

"If we follow the path we've been on until now, we will not need a fourth bailout" since the late 1970s, Passos Coelho said, reminding the Socialists that it was their administration that had to seek the bailout.

(Additional reporting by Daniel Alvarenga, editing by Axel Bugge/Euth Pitchford)