October 23, 2015 / 10:00 AM / 4 years ago

Portugal Socialists vow to topple government with no-confidence vote

LISBON (Reuters) - Portugal’s opposition Socialists pledged on Friday to topple the center-right minority government with a no confidence motion, saying the president had created “an unnecessary political crisis” by naming Pedro Passos Coelho as premier.

Pedro Passos Coelho (L), leader of the Social Democratic party (PSD), speaks with Portugal's President Anibal Cavaco Silva during a meeting in Lisbon, Portugal October 20, 2015. REUTERS/Hugo Correia

The move could wreck Passos Coelho’s efforts to get his center-right government program passed in parliament in 10 days time, extending the political uncertainty hanging over the country since an inconclusive Oct. 4 election.

Coelho was named prime minister on Thursday after his coalition won the most votes in the national election.

The nomination set up a confrontation with the main opposition Socialists, who have been trying to form their own coalition government with two leftist parties who also want an end to years of austerity policies under the center-right.

The Socialists and those parties, boosted by a swing to the left in the national election, would control most votes in parliament if they united.

In the early hours of Friday, the Socialist Party’s national commission approved a motion for its lawmakers to “present a motion rejecting any government program,” that includes similar policies to the last government.

“The president has created an unnecessary political crisis,” by naming Passos Coelho as prime minister, Socialist leader Antonio Costa said.

After the national election, Passos Coelho tried to gain support from the Socialists for his government, which instead started negotiating with the smaller far left Communist and Left Bloc parties to form a leftist administration.

“We’ll see what happens in parliament, if lawmakers reject the government program it will prolong uncertainty, but if it is approved it will stabilize the situation,” said Albino Oliveira, an analyst at brokerage Fincor.

The political stand-off has prompted concerns that the country’s economic recovery after a bailout could stumble.

But, so far, bond market investors have been calm, preferring to focus on the likelihood of more quantitative easing by the European Central Bank. Benchmark 10-year bond yields were unchanged at 2.36 percent on Friday.

The country’s PSI20 stock index was up 1 percent.

Passos Coelho’s government launched austerity measures and tax hikes during the past four years under a bailout, which plunged Portugal into a three-year recession. The country returned to growth last year, which has accelerated this year.

Reporting By Axel Bugge; Editing by Andrew Heavens

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