Portugal’s ruling coalition is set for a fifth day of talks Thursday with the opposition Socialist Party to hammer out a deal on how to meet the austerity terms demanded in a European Union-led bailout.
The Social Democratic Party of Prime Minister Pedro Passos Coelho announced talks will resume later today in an emailed note received just before 1 a.m. in Lisbon.
President Anibal Cavaco Silva, who has the power to dissolve parliament, called on the parties on July 10 to reach a “national salvation” agreement that will allow Portugal to complete its aid program through June 2014 and set early elections for after that date. He also urged them to ensure debt will be sustainable with a new government after the European Union-led bailout ends.
The president sees “very positive signs” coming from the meetings, news agency Lusa reported, citing comments made by Silva early Thursday on a warship as he starts a visit to Portugal’s Selvagens islands in the Atlantic Ocean, southwest of the mainland. He returns to Lisbon Friday morning.
The two governing parties settled a split over budget policy on July 6 with Coelho offering CDS leader and Foreign Minister Paulo Portas the post of vice premier and control over economic policy. While ruling out early elections right away, the president didn’t endorse their deal, calling for a broader pact also involving the Socialists.
Portugal’s 10-year bond yield fell 13 basis points to 7.08 percent at 10:15 a.m. in London, up from 6.39 percent on July 1, the day before a rift in the coalition emerged. The yield breached a seven-month high of more than 8 percent on July 3. The country pays 3.2 percent on its bailout loans.
The eighth review of Portugal’s progress on meeting the terms of the 78 billion-euro aid program has been pushed back to the end of August or the start of September due to the political situation, the Finance Ministry said on July 11. The review had been due to start on July 15.
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