PORTUGAL

Portugal in crisis as more ministers threaten to quit

AFP

The Portuguese government faced its most pressing challenges to date on Wednesday as two more ministers threatened to jump ship after the country’s finance and foreign ministers tendered resignations this week.

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Prime Minister Pedro Passos Coelho struggled to keep Portugal’s government from collapsing on Wednesday, with two more cabinet ministers threatening to quit after Finance Minister Vitor Gaspar and Foreign Minister Paulo Portas tendered their resignations earlier this week.

Portuguese media reported that Agriculture Minister Assuncao Cristas and Social Security Minister Pedro Mota Soares were ready to follow Portas, the leader of their centre-right Democratic and Social Centre – People's Party (CDS-PP), who tendered his resignation on Tuesday.

But Prime Minister Coelho said in a speech on Tuesday that he did not accept Portas’s resignation and would work to overcome the political stalemate.

Coelho’s conservative Social Democratic Party (PSD) is in a coalition with the smaller CDS-PP, and the future of the government now appears to rest on Portas’s decision to either stay or leave.

Markets head south

Markets reacted severely to the uncertainty that reigned over the small debt-stricken country that has imposed strict austerity under the terms of a 2011 joint EU-IMF bailout.

The Lisbon stock exchange's main index plunged 5.99 percent to 5,199.01 points in the first half hour of trade, while borrowing costs soared to danger levels.

Portugal's economy is already in turmoil, with debt rising over 10% of GDP in the first quarter of 2013 and unemployment expected to soar above 18%.

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