PM resigns, nation in political crises | world | Hindustan Times
Today in New Delhi, India
Jul 22, 2017-Saturday
-°C
New Delhi
  • Humidity
    -
  • Wind
    -

PM resigns, nation in political crises

Portuguese Prime Minister Jose Socrates announced his resignation late on Wednesday, plunging the country into a political crisis that was expected to encourage Lisbon to seek an international bailout.

world Updated: Mar 24, 2011 09:26 IST

Portuguese Prime Minister Jose Socrates announced his resignation late on Wednesday, plunging the country into a political crisis that was expected to encourage Lisbon to seek an international bailout.

The government was no longer "in a situation to govern", Socrates said after parliament rejected his government's latest austerity package.

The only party to vote in favour of the package was Socrates' Socialist Party, which has 97 legislators in the 230-member parliament.

"This political crisis could have been avoided," the premier said, blaming the crisis on the "political game" played by the opposition.

Socrates made the comments in a televised speech after informing President Anibal Cavaco Silva of his decision to step down.

Cavaco Silva is to open talks with the political parties on Friday, while the current government would remain in office for the time being, the president's office said.

Cavaco Silva was expected to leave the country in the hands of a caretaker government until early elections are held in two months' time.

A political crisis would encourage Lisbon to seek a bailout from the EU and the International Monetary Fund, Finance Minister Fernando Teixeira dos Santos warned earlier this week.

Socrates' resignation came on the eve of a key European Union summit on Thursday and Friday on restoring investor confidence in the eurozone.

The collapse of the government was expected to increase market pressure on Portugal and other economically weak eurozone countries. Portugal's borrowing costs soared earlier on Wednesday, with the yield for five-year bonds reaching the record level of more than 8 percent.

During the parliamentary debate, Teixeira dos Santos described new austerity measures as an "imperative necessity" to maintain the confidence of the EU and of financial markets in the Portuguese economy.

Manuela Ferreira Leite from the main opposition conservative Social Democratic Party (PSD) said the government had lost the trust of citizens after focusing on cutting salaries and raising taxes instead of fostering economic growth.

Socrates' minority government needed parliamentary backing to push through its fourth austerity package in 11 months. The package would have cut spending on pensions, health and education, raised taxes and postponed infrastructure projects.

Socrates has been trying to slash the budget deficit to 4.6 percent this year from 7.3 percent in 2010.

Both conservative and far-left parties have criticized the new spending cuts as slowing down growth and placing an excessive burden on citizens.

The government Monday revised its 2011 economic forecast from 0.2-percent growth to 0.9-percent contraction.

However, the government had the backing of the European Commission, which supported the latest austerity measures and urged the Portuguese opposition to act "responsibly".

The government Wednesday faced another protest against its austerity policies, with an engine drivers' strike paralysing trains on the main routes during a morning work stoppage.

The PSD, which leads in opinion polls, has raised the possibility of a broad government coalition to tackle the country's economic problems.