Coelho Saw Prompt Need for Stability in Portugal, Kampeter Says

Portuguese Prime Minister Pedro Passos Coelho grasped the need to restore political stability after cabinet resignations caused sovereign bond yields to jump, said German Deputy Finance Minister Steffen Kampeter.

Coelho has presented a plan to keep his government intact after wrangling over budget policy prompted Finance Minister Vitor Gaspar and Foreign Minister Paulo Portas to resign this week, endangering the ruling coalition’s stability. Coelho said yesterday that a “way will be found” to secure the viability of the coalition between the Social Democrats and the CDS party.

“I’ve full confidence that the plan that the prime minister has developed will restore calm to markets in a short time,” said Kampeter, a Christian Democrat, in an interview at a meeting of his party in the North-Rhine Westphalian town of Bad Salzuflen. “Portugal will quickly be back on track.”

The yield on Portugal’s 10-year sovereign bond fell yesterday to 7.13 percent. It climbed to 8.11 percent on July 3, the highest since Nov. 21. Portugal’s credit rating outlook was revised to negative from stable by Standard & Poor’s yesterday.

Coelho, who leads the Social Democrats, needs the CDS for a majority in parliament to pass measures and meet terms of a bailout from the European Union and International Monetary Fund that ends in June 2014.

To contact the reporter on this story: Brian Parkin in Berlin at bparkin@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net

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