October 30, 2015 / 2:17 PM / in 2 years

Portugal PM, president urge talks to let minority government rule

LISBON (Reuters) - Portuguese President Anibal Cavaco Silva and Prime Minister Pedro Passos Coelho appealed for renewed political talks to prevent a swift downfall of the minority government that was sworn in on Friday and that the opposition says it will topple.

Portugal's caretaker Prime Minister, and leader of the Social Democratic Party (PSD), Pedro Passos Coelho speaks to the media after a meeting with Portugal's President, in Lisbon October 20, 2015. REUTERS/Hugo Correia

Portugal’s new opposition-dominated parliament will hold a vote on Nov. 10 or 11 on the center government program that could boot out the austerity-minded administration.

The growing political uncertainty following an inconclusive Oct.4 election has prompted concerns that a timid economic recovery and improvements in public finances after a debt crisis and painful austerity measures could stumble. Portugal’s benchmark 10-year bond yield rose 7 basis points on Friday to 2.58 percent.

“The government taking over today does not have majority in parliament so the effort of dialogue and compromise has to proceed with the other political forces to seek the necessary understanding,” Cavaco Silva said.

He added that the country cannot afford to create any doubts about its European commitments.

The center Socialists argue they can form a government backed by a leftist majority that would respect the European budget rules. But the two left-wing parties they are talking two reject Brussels-imposed budget limits.

Passos Coelho said he would reinforce his efforts to achieve an understanding with the opposition, and warned that political uncertainty would carry high costs for the country that only exited an international bailout last year.

“There is no political illusion that could mask the imperative of meeting our European Union and currency union obligations. Nobody should risk the well-being of the Portuguese in the name of ideological agendas or personal or political ambition,” he said.

If the government is rejected by parliament, the president would have to either name Socialist leader Antonio Costa as prime minister or leave Passos Coelho in a caretaker capacity until after a presidential election in January.

The president cannot call new parliamentary elections in his last six months in office.

Reporting By Andrei Khalip and Shrikesh Laxmidas; Editing by Angus MacSwan

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