November 20, 2010 / 10:54 AM / 9 years ago

Portugal govt reshuffle seen, FinMin in question

* Foreign, health, public works ministers most likely to go

* Finance minister may be hard to replace during debt crisis

By Andrei Khalip

LISBON, Nov 20 (Reuters) - Portuguese Prime Minister Jose Socrates may reshuffle his government soon, local media said on Saturday, but it was unclear whether the finance minister’s post could be affected amid a debt crisis.

Foreign Minister Luis Amado, Health Minister Ana Jorge and Public Works Minister Antonio Mendonca are almost certain to be replaced between the expected approval of the 2011 budget in the final reading on Nov. 26 and presidential elections in January, various newspapers reported.

As for Finance Minister Fernando Teixeira dos Santos, who authored the austerity budget designed to slash the fiscal deficit next year and soothe investor concerns about Portugal’s creditworthiness, most media cautiously suggested it would be difficult to replace him during the current debt crunch.

Debt-laden Portugal saw a sharp loss of investor confidence in the past few weeks as concerns over fellow euro zone weakling Ireland intensified before Ireland agreed to discuss a European financial aid plan for its battered banks.

“Teixeira dos Santos is under fire, but there are doubts inside the executive branch that Socrates will get rid of his finance minister,” the influential daily Publico said.

“This is not only because he is the one responsible for the budget, but also because of their personal relationships.”

In an article called “Reshuffle only after the budget’s approval”, the “i” daily said: “Teixeira dos Santos stays on in the finance ministry. The budget execution is the government’s top priority”.

However, the Diario de Noticias said there was pressure within the ruling Socialist party for Socrates to replace Teixeira dos Santos and that Economy Minister Jose Vieira da Silva could take his place.

A government spokeswoman declined to comment on the reports.

Teixeira dos Santos came under fire after he said earlier this month that Portugal may have to resort to foreign aid if sovereign bond yields rise above 7 percent. When the yield briefly surpassed 7 percent, the government rushed to convince investors that it had no plans to request assistance.

The ruling Socialists have slumped in popularity since presenting the budget bill, which includes an average 5 percent cut in civil servants’ wages and a rise in value-added tax.

“With the Socialist Party and Jose Socrates falling in opinion polls, the reshuffle is seen as a way to get a second wind to face a difficult political situation with a financial crisis at its core,” Publico said.

Analysts have said they doubt the Socialists will last through their term which ends in 2013, but under Portugal’s constitution snap elections cannot be held before May next year.

Foreign Minister Amado is considered by all media to be the most likely to leave the government after his call for a broad coalition government upset Socrates. Amado said last week a failure to create a grand coalition could result in Portugal being forced to abandon the euro currency. [ID:nLDE6AC05V]

Editing by Mark Heinrich

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