Portugal's CDS says won't create crisis over budget

Reuters News
Posted: Oct 18, 2012 4:23 AM
Portugal's CDS says won't create crisis over budget

LISBON (Reuters) - The junior partner in Portugal's center-right coalition government said on Thursday it will not create a political crisis when it votes on next year's budget on October 31.

"The CDS will vote on the budget considering that Portugal cannot afford to have a political crisis which would make its economic and social situation more severe," the rightist CDS party said in a statement emailed to Reuters.

The statement, signed by CDS leader Paulo Portas, who is also Portugal's foreign minister, came amid growing political dissent over the scale of austerity in the budget and speculation that the coalition's unity was faltering.

Next year's budget, announced on Monday, included the steepest tax rise in Portugal's democratic history as it strives to meet goals set by a 78-billion-euro ($102 billion) IMF/EU bailout.

Soon after, lawmakers from the CDS, which guarantees the government's majority in parliament, expressed doubts over the content of the plan.

Lower tax has been a major theme of party policy when fighting elections, and the CDS has said the government should focus more on spending cuts and less on tax hikes.

But Portas, who had remained silent since the budget was presented, said the party would toe the coalition line.

"The CDS values stability at a particularly critical moment for Portugal, given we are under an international bailout," he wrote, adding that the CDS would help improve aspects of the budget.

On Thursday the IMF urged Portugal to continue its tough budget adjustment, arguing it is "imperative" for the country to be able to reduce its high debt levels and to return to debt markets to finance itself.

($1 = 0.7621 euros)

(Reporting by Daniel Alvarenga; Editing by Louise Ireland)