Portugal president approves reshuffle, ending government rift

LISBON Tue Jul 23, 2013 5:02pm EDT

A man looks at the front pages of newspapers, with headlines about the statement of Portugal's President Anibal Cavaco Silva, displayed in a shop in Sintra village, 30 km North of Lisbon July 22, 2013. REUTERS/Jose Manuel Ribeiro

A man looks at the front pages of newspapers, with headlines about the statement of Portugal's President Anibal Cavaco Silva, displayed in a shop in Sintra village, 30 km North of Lisbon July 22, 2013.

Credit: Reuters/Jose Manuel Ribeiro

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LISBON (Reuters) - Portugal's president approved on Tuesday the promotion of junior coalition party leader Paulo Portas to deputy prime minister and a wider government reshuffle as proposed by premier Pedro Passos Coelho to ensure the ruling coalition's unity after a rift.

The promotion of Portas, who leads the rightist CDS-PP party, from foreign minister to deputy prime minister coordinating talks with Lisbon's EU and IMF lenders has been a key condition to heal the rift which earlier this month had threatened to derail Lisbon's bailout.

President Anibal Cavaco Silva on Sunday ruled out a snap election and said the government should stay until the end of its term to make sure Portugal exits the bailout as planned, cooling weeks of political turmoil.

The president's office said in a statement that Rui Machete from the main ruling Social Democratic party, who has served as deputy prime minister in a previous government, was appointed foreign minister.

In another change reinforcing CDS-PP presence in the government, the premier replaced Economy Minister Alvaro Santos Pereira, an independent, with Antonio Pires de Lima, an economist and politician from Portas' party.

A new ministerial post, for environment, territorial management and energy was created by narrowing the functions of Agriculture Minister Maria Assuncao Cristas, who is also from CDS-PP. Environmental expert Jorge Moreira da Silva, from the premier's party, will fill the new post.

The new ministers will be sworn in on Wednesday.

Portas has objected to some austerity policies and some investors fear his promotion may conflict with the continuity of bailout austerity policies under new Finance Minister Maria Luis Albuquerque, appointed earlier this month to replace Vitor Gaspar, the architect of Lisbon's budget consolidation drive.

Albuquerque was previously treasury secretary and Gaspar's close collaborator.

(Reporting By Andrei Khalip; Editing by Michael Roddy)

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