Another crisis in the E.U., this time it is in Portugal.Finance Minister Vitor Gaspar quit Monday, and Foreign Minister Paulo Portas, head of the junior member of the governing coalition, stood down Tuesday.
And why is it in crisis? Well, of course, it’s all down to the austerity needed to keep Portugal in the euro zone.
Gaspar is held responsible for the severe austerity program which was the price of bailout funds from the European Union and International Monetary Fund, and his departure comes shortly before the next review of the bailout by Portugal’s creditors, which starts mid month.
The austerity program was softened a little at the last review, but the country entered its third year of recession in 2013, with joblessness at record highs and struggling with the largest tax hikes for a generation.
Now its stocks are plunging and its ten-year bond yields are by almost 1.5 percentage points higher according to TradeWeb, yielding a high of 7.88%.
“A potential vote of no confidence could topple the government and pave the way to new elections. All this could be perceived as undermining Portugal’s commitment to its bailout program and fuel peripheral risks,”
Source: WSJ
