Months of political limbo ahead “just when government poised to fire up economy”

Rejection of the State Budget in parliament yesterday consigns Portugal “to months of political limbo just when the government was poised to fire up the economy after the Covid-19 pandemic by deploying €45 billion in aid from the European Union”.

This is the way the UK Guardian has interpreted the collapse of the PS government as minister for foreign affairs Augusto Santos Silva admits the country has lost its “great international trump card” – that of political stability.

In one cruel afternoon, Portugal has gone from what was often portrayed as a feisty little country weathering almost all kinds of storms, to yet another southern European economy gripped by uncertainty.

The Guardian’s impression is that “the emergence of smaller parties that have won seats in parliament in recent years, including a surging right-wing populist party, have muddied the political outlook”.

Talking with politics professor Francisco Pereira Coutinho of Lisbon’s Universidade Nova, the paper hears this latest crisis could be “less worrying than what might be coming afterward… with a more unstable and volatile political situation than we have now”.

The Express has gone for drama, reporting “Portugal on brink of collapse – why it is sending shock waves through Europe”, while Reuters has returned to the veiled warning by Francisco Pereira Coutinho, explaining the situation could help “far-right party Chega” emerge “as the third largest force in parliament”.

To be fair, no-one can tell what will happen.

The only certainty is that President Marcelo will be meeting with the main political parties on Saturday ahead of a Council of State next Wednesday.

In a statement on his official website Marcelo reports that he met with parliamentary leader Eduardo Ferro Rodrigues, and with prime minister António Costa, last night – and that he will be meeting Social Partners (leaders of various business confederations) tomorrow (Friday).

But beyond that there is no mention even of elections (see below), which – under the terms of the Constitution – will need to be held between the 55th and 60th day following the dissolution of parliament.

This dissolution has to be performed by decree, but only produces effects once it has been published in State newspaper Diário da República.

In other words, with the time-scales allowed and the off-limits period of Christmas and New Year, there are months to play with – and even more time before a reformulated budget can be presented to parliament.

Pundits are suggesting a new budget is unlikely to come before April – with the clock ticking throughout on time-limits for receipt of Brussels’ post-pandemic recovery funding.

PM Costa has already said he is aiming for PS Socialists to be voted back into power with a “reinforced majority”. The jury remains out on whether this can even conceivably be possible.

And while political uncertainties reverberate, social unrest is riding high with so many protests scheduled for next month that newspapers are already publishing calendars so that people can know what to expect (see story to come).

Regarding the president’s message, posted last night: there is the slight possibility that instead of a dissolution of parliament, the government could be prevailed upon to produce a new budget, for presentation to the House. This is only a slight possibility. Marcelo is due to address the country on the way forwards on either November 3 (following the Council of State) or November 4.

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