Portugal's finance minister quits amid signs of austerity backlash


Portuguese Finance Minister Vitor Gaspar, who has led an austerity plan meant to balance the country's finances, has resigned over growing discontent over harsh tax rises and spending cuts.


Finance Minister Vitor Gaspar, the architect of Portugal’s austerity drive under its joint EU-IMF bailout, offered his resignation on Monday amid growing social discontent over hurtful belt-tightening measures.

Treasury Secretary Maria Luis Albuquerque, who has managed the country's privatisation efforts, will replace him.

A former central bank advisor, Gaspar, has led Portugal’s efforts to balance its finances by implementing unpopular tax hikes, state job layoffs and spending cuts.

Gaspar, 52, touted as a politically independent technocrat, was brought on to speed the country toward the goals of the 78-billion-euro bailout.

He said in his resignation letter to Prime Minister Pedro Passos that he was stepping aside because of the growing erosion of public support for the adjustment plan and the need for the government to stay the course.

A general strike by Portugal’s two main unions last week brought the country to a near standstill, with members calling on the government to ease off austerity measures.

“The risks and challenges in coming times are enormous,” Gaspar said. “They demand cohesion in government. It is my firm conviction that my departure will contribute to reinforce your leadership and the cohesion of the government.”

His departure comes amid discouraging economic data and shortly before the start of the next bailout review by Portuguese and EU leaders and the IMF on July 15.

Last week the national statistics agency reported that the country's public debt rose to 10.6% of economic output in the first quarter of 2013 with plunging tax receipts.

Under the terms of the deal the country is supposed to squeeze the deficit down to 5.5% of GDP this year.

Meanwhile, unemployment is expected to rise to a record 18.2%, while over 42% of youths are already out of work.

The opposition Socialists said Gaspar's resignation revealed the weakness of the ruling centre-right government. However, it was unlikely the move will spur early elections.

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