Coelho: Portugal Repairs Government to Avoid Collapse

Local Editor

Portugal's PM Pedro Passos Coelho repaired his ruling coalition Friday to avoid a disastrous collapse in a row over austerity measures for the bailed-out nation.
"I found a formula to hold together the shaky coalition, led by his Social Democratic Party," Coelho announced.
A number of Portuguese ministers resigned over the crisis, leaving their prime minister obliged to find a formula that assures stability of his government.
The direct outcome of Portugal's PM statement was that the bond markets surged.

The Lisbon stock index eased after surging 3.7 percent the previous day on signs of an emerging political fix.
The bonds had dramatically fallen at the height of the political crisis mid-week.
After enduring two years of austerity, that have included sharp hikes in income taxes and in sales taxes and cuts in public sector pay and pensions, the country has been mired in recession and seen its jobless rate ratchet up to 17.6 percent.

Investors feared a new wave of economic instability in Portugal as public opinion started to oppose the austerity policies in addition to the indications of the unemployment and recession.

Portugal is under pressure to present a further 4.7 million Euros in spending cuts to the European troika when its auditors visit Portugal on July 15.

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