Portugal President to Address Country After Clash With PM

Joao Lima
·3 min read
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(Bloomberg) -- Portuguese President Marcelo Rebelo de Sousa will address the country later on Thursday after disagreeing with Prime Minister Antonio Costa’s decision to keep Infrastructure Minister Joao Galamba in office.

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The president will speak at 8 p.m. in Lisbon, broadcaster RTP and news agency Lusa reported. In Portugal, the prime minister and his government set policy. The president is mainly a figurehead, though he has the authority to appoint the premier and dissolve parliament.

Costa, who has been prime minister since 2015, currently leads a Socialist government backed by an absolute majority in parliament. While he has all that support from lawmakers, over the past year he’s been rocked by challenges including surging living costs, teachers’ protests and controversies related to state-owned airline TAP SA, which the government plans to privatize.

The premier on Tuesday refused to accept Galamba’s resignation request and backed the infrastructure minister following reports about clashes with a former aide that he’d dismissed. Galamba, who oversees TAP, has denied news reports on allegations made by Frederico Pinheiro, his former aide, claiming that the minister tried to withhold information about the airline from a parliamentary inquiry.

President Rebelo de Sousa said in a note on the presidency’s website that day that he disagreed with the prime minister’s “position about the political interpretation of the facts.”

Read more: Portugal May Start Privatization of Airline TAP Before Summer

It’s not the first time that the airline has caused problems for the government. Galamba was named infrastructure minister in January after his predecessor Pedro Nuno Santos resigned following criticism about the severance payment received by a board member who left TAP, which is receiving more than €2 billion ($2.2 billion) of government aid as the country battles with a cost-of-living crisis.

Debt, Growth

Premier Costa is overseeing an economy that’s trying to bounce back after the pandemic while also facing the impact of the war in Ukraine. The Bank of Portugal in March raised its 2023 economic growth forecast to 1.8%, citing an improved performance of the tourism industry. For Portugal, which has the third-highest debt ratio in the euro area behind Greece and Italy, tourism represents about 15% of the economy.

While the economy has been recovering, wages remain low in Portugal, one of the poorest countries in Western Europe. Center-right opposition party PSD has said the economy should grow faster and has pointed out that Portugal has been overtaken in terms of gross domestic product per capita by eastern European nations that joined the European Union later, including the Czech Republic and Slovenia.

A survey published by news radio TSF on April 24 indicated 28.3% support for the ruling Socialists, just below the 28.6% backing for PSD. It also showed 12.1% support for the far-right Chega party, currently the third-biggest group in parliament.

Following his win in the January 2022 early general election, Costa no longer needs far-left parties to back his budgets like he did in his previous two terms. The Socialists have pledged budget discipline, together with further improvements in household incomes and higher investment in areas including health care and housing.

Given the country’s debt pile, Portuguese governments have to keep borrowing costs in check. Portugal’s 10-year bond yield was at 3.1% on Thursday, up from 2.1% one year ago but still lower than the rate for Italy or Spain. It peaked at 18% in 2012 at the height of the euro region’s debt crisis.

(Updates with details on infrastructure ministry from fourth paragraph, debt and economy from seventh.)

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