* CDS party leader says values political stability
* Strikes hit Galp refineries and Lusa news agency
* Rightist CDS to suggest budget "improvements"
* Portuguese losing patience with austerity
By Daniel Alvarenga
LISBON, Oct 18 The junior party that guarantees
the Portuguese government's majority in parliament promised on
Thursday not to create a political crisis when it votes on next
year's tax-grabbing budget on Oct. 31.
Political dissent over the scale of austerity in the budget
has grown and prompted speculation that the centre-right
coalition could fracture under the pressure of meeting the terms
of Portugal's international bailout.
Popular protests are also growing. Thousands have taken to
the streets and on Thursday, workers at oil company Galp
refineries and state-controlled news agency Lusa went
on strike. A general strike is scheduled for Nov. 14.
But the CDS party, the right-wing junior partner in the
coalition government, said in a statement emailed to Reuters
that it "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 statement was signed by CDS leader Paulo Portas, who is
also Portugal's foreign minister.
Next year's draft budget, announced on Monday, includes the
steepest tax rise in Portugal's democratic history as the
country strives to meet the goals set under its 78-billion-euro
($102 billion) bailout from the European Union and International
"I do hope this budget will pass in parliament," Prime
Minister Pedro Passos Coelho told reporters in Bucharest, before
attending a European Union summit.
In Thursday's strikes, production halted partially at Galp's
two refineries while Lusa transmitted no news
items on Thursday as journalists started a four-day protest
against an announced 30 percent wage cut for next year.
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," he wrote, adding that the party would help
improve aspects of the budget. Parliament will vote on the
budget in the first reading on Oct. 31, then it will be
scrutinised in committees.
Analysts say that while the resilience of the Social
Democrat-led (PSD) government is now guaranteed in the short
term, the Portuguese are fast losing patience with austerity.
"The health of the coalition is not the real problem -- CDS
could not really go against the Social Democrats before local
elections next year," said Adelino Maltez, political scientist
at Lisbon Technical University.
"The problem is Portugal's condition as a protectorate that
has led to a lack of confidence by the people in the main
parties while the crisis is certain to get worse."
The popularity of the Social Democrats is at record lows and
below that of the opposition Socialists.
Passos Coelho said the budget reflected negotiations with
lenders. "It is a strong instrument to complete the adjustment
programme that we are implementing," he said.
On Thursday the IMF urged Portugal to stick to its budget
overhaul, calling it "imperative" for the country to reduce its
high debt levels so that it can return to debt markets to
Portuguese benchmark 10-year bond yields have fallen to
below 7.8 percent -- levels last seen before the April 2011
bailout request -- after hitting record highs of over 17 percent
at the start of the year.