- Portuguese President Anibal Cavaco Silva
Portuguese President Anibal Cabaco Silva accepts compromise reached by the coalition government, meaning an end to a weeks-old political crisis. According to the President, it is the best solution for the country to keep the current government in power. The decision comes after the country's three main parties failed to agree on how to proceed with strict austerity measures, raising concerns Portugal will be unable to abide by the terms of its 78 billion euros bailout.
Investors welcomed this news by helping the shares of Lisbon's PSI 20 exchange to jump 1.7% on Monday. While the yields on 10-year bond fell 0.36 percentage points to 6.37. On July 2 Foreign Minister Paulo Portas offered his resignation, adding significant turbulence into markets. However, the President did not clarify whether he would accept Portas' nomination to the new post. Nevertheless, the decision should provide the coalition with another chance to avoid holding early elections amid broad public discontent, as people are concerned with harsh austerity measures. Support for the current austerity programme is weakening, as the jobless rate hovers around 17%, while the recent resignation of two ministers is highlighting political as well as financial issues.
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