Portugal comes out of a period of two months instability -since center-right coalition of Pedro Passos Coelho, former PM, won the election on October 4th but later lost its parliamentary majority.
The leader of the portuguese socialist party Antonio Costa , took office as new PM on Thursday.
Unexpectedly, Costa allied with radical left-wing parties – namely the communists and the Left Bloc – and consequently the center-right coalition’s government program was voted down in Parliament. Something similar to what happened in Greece some months ago.
Now Costa will have to balance its promises. On the one hand, radical left wing parties accepted to support the socialist government as long as Costa contrast austerity measures pursued by the previous center-right government. On the other hand, he will have to maintain the confidence of creditors, also implementing measures “to fight poverty and inequality” , measures which were neglected by the previous government, according to the new PM. Moreover, Costa is expected to meet the deficit and debt targets agreed with the European Union.
Despite Mr. Costa difficulties to meet all expectations, it seems that investors welcomed Portugal’s change of direction, since Portugal auctioned almost €1 billion in 10-year bonds on Wednesday.