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Portuguese Government is likely to step down in the upcoming months as the announcement of a new austerity package (PEC IV), hours before the last Friday EU leaders meeting in Brussels, has been causing an enormous unrest in the country, analysts say.
The Portuguese President, Anibal Cavaco Silva, and the opposition parties were not informed of such measures until Friday. José Sócrates, The Portuguese Prime Minister, is now criticized for having prepared the new package, along with the European Central Bank and the European Commission, without consulting the President and the other parties.
Pedro Passos Coelho, leader of the major opposition party, has said that would vote against this new package in the Parliament. The other parties have also opposed to it, the Portuguese press reported.
The new package, called PEC IV, comes after three packages that had already introduced tough cut deficit measures. PEC IV asks for even more efforts from Portuguese families that have been doing serious sacrifices, paying more taxes and receiving less social benefits.
“This new package is cruel for elderly people with low income pensions. In my view Sócrates has committed a tremendous mistake as he left the President, the Parliament and other stakeholders apart of the negotiations with the European Union. The political stability is now in danger and this does not help to calm down the markets”, said Professor Marcel Rebelo de Sousa on TVI news.
The PEC IV has been imposed by European Union in order for Portugal to benefit from the European Financial Stability Facility (EFSF). During last Friday’s meeting, Europeans Leaders decided that these funds, which values 440 billion euros, would be available to buy bonds from countries that cannot afford anymore the current high interest rates. The European Leaders also decided to lower the interest rates on Greece bailout loans by 1 per cent and extend the maturity to ease the burden.
This political crisis can prevent Portugal from benefiting of the European Financial Stability Facility, since to access this financial mechanism the country needs to commit itself to the PEC IV.
If the Portuguese Government steps down before the conclusion of the European negotiations regarding the bailout fund, the country will not have access to it. Therefore, it will stay more and more vulnerable to the markets and the result might be the bankrupt, a European diplomat said.
Today, José Sócrates called together all the ministers for an extraordinary meeting. The agenda was not revealed.