Portugal PM puts austerity before election victory

Reuters News
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Posted: Jul 24, 2012 7:02 AM
Portugal PM puts austerity before election victory

LISBON (Reuters) - Portuguese Prime Minister Pedro Passos Coelho pushed his tough pro-austerity line a step further, telling his party he would rather lose at the ballot box than abandon his policy of strict adherence to the terms of an EU/IMF bailout.

"The path we are following now is not right or wrong, it's the only possible path," he told representatives of his centre-right Social Democratic Party late on Monday at an event marking the start of parliament's summer recess.

"If one day we have to lose elections in Portugal in order to save the country, then, as they say, the hell with elections," he told the party meeting. The audience applauded his remarks, broadcast by Portuguese television.

The ruling coalition has a firm majority in parliament after winning elections in June 2011, and general elections are not due for three years. But there will be regional elections in the Azores this year and a round of municipal elections in 2013.

Passos Coelho's party still leads in opinion polls, though the popularity of the ruling coalition, which includes the rightist CDS-PP party, has waned following painful tax rises and spending cuts that have led to a steep recession but have not yet produced a sizeable cut in the public deficit.

Together, the two parties had about 45 percent of voters' support according to the latest Eurosondagem opinion poll published in mid-July, down from about 50 percent at the election. The main opposition Socialists had 32.5 percent.

Portugal has been implementing austerity measures and structural reforms aimed at improving competitiveness under the terms of a 78 billion euro EU/IMF bailout.

The government has won praise from Brussels and the International Monetary Fund for its resolve in sticking to the terms of the bailout deal amid a worsening European economic outlook and the euro zone debt crisis.

Many economists say recession-hit Portugal is likely to need more rescue funds before it can finance itself in the capital markets, but the government has insisted it will not ask for more money or time to meet the fiscal targets.

(Reporting By Andrei Khalip, editing by Tim Pearce)