Portugal fails to agree plan to hit bailout targets

PORTUGAL’S President Anibal Cavaco Silva said last night he had decided to keep the centre-right coalition government at the helm to help end a weeks-old political crisis and keep an international bailout on track.

The crisis threatened to derail Lisbon’s planned exit from the EU/IMF bailout.

“As the national salvation compromise was impossible to achieve, I consider that the best alternative solution is for the present government to remain in its functions, with reinforced guarantees of cohesion and solidity of the coalition, until the end of its term (in 2015)” , he said in a televised address.

His decision came after talks to form a grand coalition in Portugal failed over the weekend as centre-right and socialist parties failed to agree on how to meet deficit reduction targets.

The country has had to request a delay to the latest review of its bailout by the EU and the International Monetary Fund (IMF) because of political disagreements.

Portugal had hoped to meet the terms of the bailout and return to the international bond markets in the middle of next year.

That would mark a return to being able to finance itself rather than relying on other countries’ support. The ruling centre-right coalition argues its policies are the only way to restore credibility with Lisbon’s lenders and investors.

But the opposition Socialists insist its plans to renegotiate the bailout’s terms would help end the need for an austerity programme.