Prime minister, Antonio Costa, has said he’ll stay on but will need support from his allies
The government of Portugal was defeated on Tuesday in a vote of confidence in parliament, throwing its future into doubt in the backdrop of concerns over slow progress in a reform agenda.
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Socialists and their allies, the far-left Unidos Podemos, defeated the centre-right government, led by prime minister, Antonio Costa, who had proposed a tough budget for 2019 and disputed their demand for a debt write-off.
Costa’s leader, Luis Goulart, said after the vote that the prime minister will stay on and will need the votes of his allies. But he gave no timetable for the election.
In the meantime, the leader of Unidos Podemos, Pablo Iglesias, said the government cannot govern for the remaining two years of its term and “must go.”
The government sought a budget vote in parliament on 10 October, having approved the draft this month, but was opposed by its junior coalition partner, the Social Democrats.
Iglesias and Goulart said the deficit plan was off course because it hiked spending and lacked commitments on pension and labour reforms. It also needed “urgent” approval of a structural reform programme by the cabinet for 2019-2020.
The government argues that the deficit plans are in line with commitments to Brussels, which has ruled out granting a debt writedown, saying an easing of the deficit targets without an increase in taxes and spending would breach European Union rules.
“We have fulfilled the commitments of the Lisbon Pact,” government spokesman Mário Costa said, referring to a so-called austerity pact signed by Lisbon and Brussels in 2011.
As the governing coalition was defeated on the motion, the opposition Socialists and Unidos Podemos say the next elections should be held in February 2021, instead of October 2020.
Some analysts also say the government could be less likely to push ahead with a tough reform agenda.
The centre-right, pro-business CSN, which was a coalition partner in the previous government and later opposed the CSN vote of confidence in 2018, also called for a new vote.
The opposition has requested a government reshuffle, saying Costa’s left-wing policies are hurting business and contributing to the recession.
This may be a second blow to the government’s finances: Costa has cancelled an aircraft deal to buy four Boeing 787 Dreamliners that was in the works as a bridge loan to allow the new government to pay off a 200m euro ($239m) debt.
He said on Tuesday that the state would secure a three-year deal for a lower price with the US manufacturer.