(Image Source: BBC)

 

BY ALEJANDRA QUINTELA SANCHEZ

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Trouble with the Portuguese purse -- leads to trouble at the ballot box.  The Social Democrats, led by Pedro Passos Coelho, unseated the governing Socialists with a clear parliamentary victory.  MSNBC has more.

“The Portuguese have effectively moved to the right. It is a center-right government that they have elected. It is hard to say that they voted for it because they want austerity. They effectively punished the socialist government that was in charge and you could argue has got the means to the financial mess they are in”


In the wake of Portugal’s ongoing fiscal crisis, the Social Democrats won 39 percent of the votes, while the Socialists tallied just 28 percent. The Financial Times reports, European Commission President Jose Manuel Barroso calls the vote the most important since Portugal’s first democratic elections in the 1970s.

“Given the economic and financial situation of the country, this election is really decisive.”

Now, Portugal’s incoming prime minister must seek to form a majority coalition with the conservative Popular Party.  The goal -- to implement austerity measures as repayment for the $114 billion international bailout.

“We will do everything we can to honor the engagement between the Portuguese state, the EU and the IMF to take Portugal away from the external bailout that was needed and regain the confidence of the markets in Portugal because this is essential to recover our own confidence in the country.” (Euronews)


Al Jazeera reports, outgoing Prime Minister Jose Socrates has resigned as head of the Socialist Party, and admitted to having made some mistakes.

"This defeat is entirely mine and I want to assume full responsibility for it ... I feel it is necessary to open a new political cycle that is able to prepare a consistent alternative. I want to give the Socialist Party the space to discuss its future and select a new leadership."


The New York Times reports IESE Business School economics professor Luis Cabral thinks the social democrat victory is positive for Portugal ‘s creditors.


“One can only hope that the pressure created by the current economic and financial crisis will suffice to garner the political support required for a series of painful and unpopular but necessary reforms.”


Finally, Bloomberg talks with Banco Carregosa’s Filipe Silva, who says, it’s too early to say whether Coelho’s victory will be enough to drag Portugal out of its debt crisis.


“In the bond market, it’s possible that this election result is seen as something positive in the short term. But I don’t think it’s enough to change the trend in Portuguese bonds.”

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