November 25, 2015 / 2:22 PM / 4 years ago

Bank of Portugal economist Centeno named finance minister

LISBON (Reuters) - Portugal’s President Anibal Cavaco Silva has accepted the lineup of a new Socialist government in which Bank of Portugal economist Mario Centeno will serve as finance minister, and will swear it in on Thursday, his office said in a statement.

Portugal's Socialist party (PS) leader Antonio Costa speaks to the media after a meeting with Portugal's President Anibal Cavaco Silva at Belem Palace in Lisbon November 20, 2015. REUTERS/Rafael Marchante

With a PhD from Harvard, Centeno, 48, is an expert on labour market issues.

He was the main economic policy advisor to Socialist leader and prime minister-designate Antonio Costa, coordinating the Socialist economic programme before an Oct. 4 election in which centre-right won most votes but lost its parliamentary majority.

That ultimately led to Costa’s appointment as prime minister on Tuesday, paving the way for a Socialist government that will have to rely on two far left parties for survival. A history of division within Portugal’s left means many see that arrangement as potentially unstable.

The Socialists’ programme seeks to end painful austerity applied by the previous government. It will aim to increase households’ disposable incomes to boost the economy and reduce the budget deficit in line with European rules.

Centeno worked as deputy head of the economic research department at the Bank of Portugal between 2004 and 2013, and, more recently, as a consultant to the central bank board.

As an economist, Centeno has argued that minimum wage hikes, one of the banners of the far left, can be harmful to employment of low-skilled workers.

He has also spoken against excessive job protection as bad for the economy since it shields permanent contracts for long-time workers while those on precarious temporary jobs have to bear the burden of economic adjustment. Instead he proposes a single, balanced type of contract for all.

In total there will be 17 ministers serving under Costa, four of them women, including Portugal’s first black minister, Francisca Van Dunem, who will be in charge of the justice ministry.

Appointees such as Foreign Minister Augusto Santos Silva have previous government experience, but there are many new faces, including 38-year-old biochemical researcher Tiago Brandao Rodrigues, who will hold the education portfolio.

Reporting by Andrei Khalip; Editing by Axel Bugge and Catherine Evans

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