3 Jul 2013
Political disruption, not turmoil - BAML
FXstreet.com (London) - Tomos Rhys Edwards, Global research at Bank of America Merril Lynch said that political tension is increasing in Portugal.
“Finance Minister Gaspar resigned since he thought his credibility had been undermined. Hours later the foreign affairs minister Portas, from the junior coalition party, resigned because he disagreed on the replacement for Gaspar.” He said that going forward there is the risk of early elections, if the junior coalition party removes the support. “The Prime Minister Coelho refused Mr Portas resignation and said he would seek to negotiate a stable government solution with Mr Portas's. All relevant parties likely have the incentive to avoid any major backstop to the programme at this stage, so we believe the crisis can be avoided.” However, he said in their view, even if early elections are avoided now, programme fatigue should keep this risk high and hence we expect political uncertainty going forward which could weight on programme implementation.
“Finance Minister Gaspar resigned since he thought his credibility had been undermined. Hours later the foreign affairs minister Portas, from the junior coalition party, resigned because he disagreed on the replacement for Gaspar.” He said that going forward there is the risk of early elections, if the junior coalition party removes the support. “The Prime Minister Coelho refused Mr Portas resignation and said he would seek to negotiate a stable government solution with Mr Portas's. All relevant parties likely have the incentive to avoid any major backstop to the programme at this stage, so we believe the crisis can be avoided.” However, he said in their view, even if early elections are avoided now, programme fatigue should keep this risk high and hence we expect political uncertainty going forward which could weight on programme implementation.