Silva Meets Banks as Portugal Awaits Next Premier

  • President to decide who will govern after Premier Coelho fell
  • Socialists want to form minority government, ease austerity

Silva held separate meetings in Lisbon with the CEOs of lenders including Banco Comercial Portugues SA, Banco BPI SA and Caixa Geral de Depositos SA on Wednesday, according to the presidency. The president will meet the parties represented in parliament on Friday, news agency Lusa reported.

The Socialists joined other opposition parties and formed a majority to block the government’s program and oust Prime Minister Pedro Passos Coelho in a vote in parliament on Nov. 10, five weeks after Coelho’s coalition took the most votes in Portugal’s general election. While the Socialists say they can form a minority government propped up by the three other left-wing parties, it’s up to the president to decide whom to ask to form an administration.

President Silva, who will step down after presidential elections that are due to take place in January, could name Socialist leader Antonio Costa as premier or he can opt to seek an alternative. He can also let Coelho continue as caretaker. Silva met groups including the Business Confederation, and unions CGTP and UGT last week. He visited businesses in the island of Madeira this Monday and Tuesday.

The constitution states that parliament can’t be dissolved less than six months after it’s elected, meaning that early elections could only be called from April 2016. Coelho, now a caretaker premier, on Nov. 12 called on his Socialist opponent to back a review of the constitution and allow early elections.

Negative Yield

Portugal’s 10-year bond yield fell 6 basis points to 2.51 percent on Wednesday, after rising last week to as much as 2.91 percent, the highest since July. After peaking at 18 percent three years ago at the height of Europe’s debt crisis, the yield fell to as low as 1.5 percent in March and was at 2.3 percent just before the Oct. 4 election. Portugal auctioned 1.1 billion euros ($1.2 billion) of 12-month bills at a negative yield on Wednesday.

“What’s essential is to comply with the most important commitments that the country has at the European level,” Banco Comercial CEO Nuno Amado said in comments broadcast by television station RTP after he met the president.

Socialist leader Costa plans to reverse state salary cuts and bolster family incomes. He says he can do that and keep the budget deficit below the European Union limit of 3 percent of gross domestic product through 2019.

Coelho’s government prefers an export-led recovery and planned to ease austerity at a slower pace than the Socialists. He won the most seats in the Oct. 4 election,though his coalition fell short of the majority it held for the past four years as it led Portugal through a financial aid program.

(Corrects to say presidential elections are due to be held in January in fourth paragraph.)
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