Portuguese government ousted by Socialist coalition after losing parliamentary confidence vote
Portugal's centre-right coalition government has been voted out of parliament by a vote of 123 to 107 after just 11 days in office.
While Prime Minister Pedro Passos Coehlo was expected to lose, it is unclear whether the president of Portugal will ask the Socialist-led coalition – which formed over the weekend to oust the current minority government – to form a new leadership.
The President is able to call a new election which would likely be held next year. He is likely to appoint Coehlo as a caretaker leader in the meantime.
The news that the Socialist party had formed a formidable coalition caused Portuguese government borrowing costs to rise yesterday and also knocked four per cent of the Lisbon stock market.
Colin Bermingham, an economist at BNP Paribas, expects the President to allow the left-wing coalition to govern but warned of a period of uncertainty. He said:
All eyes now turn to the president, who has wide degree of latitude constitutionally in terms of deciding whether to appoint the left to government or to reinstate the coalition in a caretaker capacity until new electionSs can be held in April. With a political pact in place, it looks likely that the president will need to give the left the opportunity to govern.
The clock is ticking, given that Portugal has yet to submit a draft budget to the European Commission. This is likely to prompt a relatively quick decision from president. While the left have agreed policies in principle, it will still likely take some more time before a full programme for government is drafted and presented to the parliament. This process took roughly two weeks for the coalition and it had already been in government. Thus, there is likely to be continued uncertainty for at least of couple of weeks.