Portugal in disarray as second minister in two days resigns

PORTUGAL’S government was thrown further into chaos yesterday when the leader of the ruling coalition’s junior partner quit as foreign minister – the second senior resignation in two days.

Paulo Portas said he was quitting in protest at prime minister Pedro Passos Coelho’s choice of treasury secretary Maria Luis Alburquerque as the country’s new finance minister.

Alburquerque’s appointment, which came after previous finance minister Vitor Gaspar quit on Monday, appears to signal that Coelho will not deviate from his path of austerity.

Coelho, who said he would not accept Portas’s resignation, pledged to remain as Prime Minister and forge a stable government, while the Portuguese opposition called for an early general election.

“I will not resign or abandon my country,” Coelho said. “With me, the country will not choose political, economic and social collapse.”

As of last night, it was unclear whether the coalition’s junior party – the centre-right Popular – would withdraw its remaining two ministers from government. Coelho said he would hold talks with the party.

Following the news of Portas’s resignation, the yield on Portuguese 10-year government bonds jumped five per cent to 6.72 per cent – the highest level this year – on fears Portugal’s austerity plan could go off track.

Meanwhile, Greece was warned by Eurozone officials and the International Monetary Fund that it faces the prospect of losing the next round of its bailout funds if it fails to live up to agreed spending cuts.

The country is believed to have a matter of days to convince lenders that it can speed up public sector reform, with Eurozone leaders meeting next week to discuss the bailout.