Portugal's govt unveils its plans but it's likely doomed

AP News
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Posted: Nov 09, 2015 11:25 AM
Portugal's govt unveils its plans but it's likely doomed

LISBON, Portugal (AP) — Portugal's prime minister told Parliament on Monday about his plans for the next four years, even though an unprecedented alliance of anti-austerity parties is poised to unseat his center-right government within 24 hours.

Pedro Passos Coelho opened a two-day debate that was to conclude with a vote that could make his government the shortest ever. His coalition government was re-elected last month but lost its outright majority in Parliament.

The second-placed Socialist Party has forged an alliance with the Communist Party and the radical Left Bloc to create a 122-seat majority in the 230-seat Parliament. Those parties want to reverse some cutbacks and reforms demanded by creditors following Portugal's 78 billion-euro ($84 billion) bailout in 2011 and have vowed to force the government's resignation in a vote Tuesday.

Austerity measures introduced after Europe's recent financial crisis have caused political uncertainty across the 19-nation eurozone, and the upheaval in debt-heavy Portugal appeared likely to send a shiver through financial markets.

Portugal's budget deficit in 2010 was over 10 percent after years of overspending and spooked investors who stopped lending it money. The post-bailout cuts brought a three-year recession, and unemployment surged to a record 17 percent. Portugal is now growing again, with the jobless rate falling to 12 percent and the deficit expected to fall to 3 percent this year.

"Austerity was never a choice, it was a necessity," Passos Coelho told lawmakers, adding that prudent fiscal management is still required.

But left-of-center parties want to move on more quickly from austerity. Though full details of their pact are not yet public, they have revealed some of their planned measures: give back government workers their pay that was cut; unblock pension increases; spend more on the national health service; provide free nursery schools for all 3-year-olds and free school books for all; reduce sales tax at restaurants from 23 percent to 13 percent; and restore four public holidays that were scrapped to improve productivity.