Portugal president accepts new minority government amid uncertainty

Pedro Passos Coelho’s centre-right coalition to be sworn in on Friday

Portugal's president Anibal Cavaco Silva has accepted the line-up of a new minority government formed by premier Pedro Passos Coelho, setting the countdown for it to win approval of the opposition-dominated parliament or fall next month.

The presidency said in a statement that the new ministers of the centre-right government, most of whom have served in the previous administration, will be sworn in on Friday.

Under Portuguese law, the new government has to present its programme to parliament 10 days after taking over. If it is rejected, the government will fall.

Portugal’s main opposition Socialists last week pledged to topple the centre-right minority government with a no-confidence motion.

Mr Passos Coelho was named prime minister on Thursday after his coalition won the most votes in the national election on October 4th but lost its majority in parliament, which swung to leftist parties.

The Socialists have been negotiating a coalition agreement with the Left Bloc and the Communists and all three parties have criticised the president for naming Mr Passos Coelho as prime minister, calling it a waste of time.

Mr Passos Coelho's Social Democrats have in the past few days called for renewed dialogue with the Socialists. Paulo Portas, leader of the junior ruling coalition partner CDS-PP, will stay on as deputy prime minister in the new government.

Maria Luis Albuquerque who has served as finance minister since mid-2013, will keep the portfolio in the new cabinet, along with most other ministers.

The political stand-off has prompted concerns that the economy’s recovery, after a debt crisis and an international bailout, could stumble.

But, so far, bond market investors have focused instead on the likelihood of more quantitative easing from the European Central Bank that have kept bond yields low. Benchmark 10-year bond yields were little changed at 2.45 percent on Tuesday.

Mr Passos Coelho's government pursued austerity measures and tax hikes during the past four years under a bailout which plunged Portugal into a three-year recession. The economy returned to growth last year and accelerated this year.

(Reuters)

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