Portugal political crisis likely to deepen

Two more ministers expected to resign as turmoil threatens to derail bailout exit

Two more Portuguese government ministers were preparing to tender their resignation today, according to local reports, deepening the turmoil that could derail Lisbon’s exit from an international bailout.

Agriculture minister Assuncao Cristas and social security minister Pedro Mota Soares are understood to be set to follow their CDS-PP party leader Paulo Portas who tendered his resignation yesterday.

Prime minister Pedro Passos Coelho told the nation late last night that he did not accept Mr Portas' resignation and would continue to head the government to ensure political stability and work to overcome the stalemate.

However, with no solution imminent, Portugal’s bond prices slumped further. The returns investors demand to hold 10-year bonds surged to above 7.5 per cent for the first time since November.

Portugal’s PSI 20 stock index slumped 6 per cent, led by sharp losses of over 10 per cent in bank shares.

Mr Coelho’s decision puts the responsibility for the government’s survival squarely on the shoulders of Mr Portas, who now has to decide whether to stay in his post or pull his rightist CDS-PP party out of the coalition. Without the CDS-PP, the centre-right government would lose its majority.

The party’s top brass will hold a meeting later today, after which Mr Portas is likely to make a statement.