Portugal’s budget squabbles risk triggering snap elections

LISBON, October 25 (Reuters) – Portugal’s socialist government could be on the verge of collapse after six years of minority rule, with the administration’s former far-left allies threatening to vote against the 2022 budget later this week .

President Marcelo Rebelo de Sousa on Monday called for “common sense”, warning that without a budget, which relies heavily on EU recovery funds in the event of a pandemic, “there will be no alternative to immediate dissolution of parliament “and early elections two years ahead of schedule. .

Prime Minister Antonio Costa’s socialists have 108 out of 230 seats in parliament and need at least nine other lawmakers to abstain in Wednesday’s first vote.

Last-minute haggling and ultimatums haven’t blocked the approval of previous socialist budgets, but some analysts warn that room for maneuver has shrunk.

Communist leader Jeronimo de Sousa said his 10 MPs would vote against, warning that Communists do not fear election battles.

“We went to our limits in the months-long negotiations and only a stroke of magic would change our vote against the budget,” he told reporters.

Left Bloc leader Catarina Martins said she remained open to negotiations until Wednesday, but the 19-seat party would vote against the budget unless the government accepts some of its proposals .

Former socialist allies say the government is too focused on deficit reduction.

They are asking for more benefits and protections for workers, improvements in the social security system and much more public investment in the national health service.

Prime Minister Costa has said his government will never agree to undermine Portugal’s hard-won external credibility.

Duarte Cordeiro, deputy minister of parliamentary affairs, said the cabinet would meet Monday evening to “assess the political situation” and was ready to negotiate, but “felt no sign of rapprochement” from the far left.

“We also cannot have a budget that does not belong to the government,” he added.

Political scientist Antonio Costa Pinto said rationality suggests the two far-left parties would miss the budget, as they lost votes in successive previous elections, but their ideological red lines clashed with those of the socialists.

“Everything seems to point to the end of a cycle,” he said.

The bill provides for income tax cuts for the middle class and an increase in public investment, while reducing the deficit for the second year in a row to 3.2% of gross domestic product from 4.3% in 2021 .

Report by Sergio Gonçalves; edited by Andrei Khalip, Toby Chopra and Angus MacSwan

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