Por­tu­gal’s PSD and CDS-PP sign coali­tion deal

Kathimerini English - - Business & Finance -

LIS­BON (AFP) – Por­tu­gal’s cen­ter-right So­cial Demo­cratic Party (PSD) signed a coali­tion deal with a smaller right-wing party yes­ter­day, pledg­ing to transform the coun­try and win the con­fi­dence of the mar­kets. The agree­ment be­tween the PSD and the Demo­cratic and So­cial Cen­ter (CDS-PP) fol­lowed June 5 elec­tions which ousted the So­cial­ists, in power since 2005, against a back­ground of deep fi­nan­cial cri­sis. The two par­ties “rec­og­nize the ab­so­lute ne­ces­sity to give Por­tu­gal a ma­jor­ity coali­tion gov­ern­ment, the pri­mary con­di­tion to bring the coun­try out of cri­sis and re­spect the com­mit­ments made to the Euro­pean Union and the In­ter­na­tional Mon­e­tary Fund,” the agree­ment said. It was signed the day af­ter PSD leader Pe­dro Pas­sos Coelho, 46, was named as prime min­is­ter by Pres­i­dent Ani­bal Cavaco Silva, with the task of im­ple­ment­ing a dras­tic aus­ter­ity pack­age im­posed by the EU and IMF. The pro­gram in­volves spend­ing cuts and eco­nomic re­forms Lis­bon agreed last month in ex­change for a 78-bil­lion-euro ($110-bil­lion) bailout. fund must dou­ble to 1.5 bil­lion eu­ros,” Wellink told the Dutch fi­nan­cial daily Fi­nan­cieele Dag­blad in an in­ter­view. Asked about the pri­vate sec­tor’s par­tic­i­pa­tion in a new aid pack­age to Greece, es­pe­cially wanted by Ger­many, Wellink said it should be “truly vol­un­tar­ily.” He added, “If you take the risk, then you must re­al­ize that you have to build a safety net,” that is, “dou­bling the emer­gency fund,” as eu­ro­zone coun­tries dis­cuss a plan for new fi­nan­cial aid to Greece. The Euro­pean Fi­nan­cial Sta­bil­ity Fa­cil­ity (EFSF), the body cre­ated by the Euro­pean Union as a res­cue buf­fer for EU coun­tries fac­ing crit­i­cal prob­lems over fi­nanc­ing their debt, has a ca­pac­ity of 400 mil­lion eu­ros (564 mil­lion US dol­lars). It is fur­ther com­ple­mented by an en­ve­lope from the Euro­pean Com­mis­sion and by the In­ter­na­tional Mon­e­tary Fund to a to­tal value of 750 mil­lion eu­ros. Wellink steps down as cen­tral bank gov­er­nor at the end of the month. rogroup meet­ing,” she said. She also said that the IMF board will still have to ap­prove the “con­clu­sions of the pend­ing pro­gram re­view.”

(Bloomberg) some ex­perts say would be con­sid­ered a de­fault. The Euro­pean Cen­tral Bank warns that forc­ing losses on pri­vate cred­i­tors could pum­mel banks in Greece and Europe hold­ing Greek bonds, trig­ger­ing a dan­ger­ous chain re­ac­tion in mar­kets. (AP)

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