The minority government of Portuguese Prime Minister Antonio Costa received a major boost Sunday after his Socialist Party gained in national municipal elections.
Two years before the next general election is due, the Socialists took 38 percent of the vote and 153 town halls with 99 percent of the country’s voting districts reporting, according to the government’s election website.
“The Socialist Party had its biggest local election victory in history,” Costa said late on Sunday in a speech broadcast by RTP television from the party’s headquarters in Lisbon. “There’s a strengthening of the change that we started in parliament two years ago and which has demonstrated to the country that it’s possible to have better results with new policies.”
Portugal has 308 municipalities, and the Socialists went into the election holding 149 of these plus one in a coalition in Funchal on the island of Madeira. Socialist Mayor Fernando Medina won Sunday’s election in Lisbon, the country’s biggest city.
Higher tourist arrivals and growing exports have helped drive a rebound in Portugal’s economy, strengthening Costa, a former Lisbon mayor, as he tries to lower unemployment and cut the budget deficit to its lowest point in four decades.
Since taking office in December 2015, Costa has governed with the support of the Left Bloc, Communist and Green parties, as he has sought to alleviate some of the budget austerity measures introduced by the previous government. While Costa has reversed cuts to government sector salaries and reduced working hours for state workers, he has also raised the minimum wage and increased some indirect taxes.
Pedro Passos Coelho, leader of the opposition Social Democrats, said he would consider whether to run again for his party’s leadership following the local election defeat. “We had one of our worst results,” he told supporters in Lisbon.
Recent Challenges
The Socialist Party’s strong performance in Sunday’s municipal elections comes after a number of recent challenges.
In July, the conservative CDS party called for the defense minister to step down after ammunition was stolen from a military facility. The deaths of more than 60 people in a forest fire in June also led to calls for the resignation of the interior minister.
Support for the Socialist Party stood at 40.3 percent support according to a nationwide poll published by the weekly newspaper Expresso on Sept. 8, leading the opposition Social Democrats by 11. The Socialists received 32 percent of the vote in the October 2015 general election and are the second biggest party in parliament.
With the 2018 budget bill due to be introduced to parliament by Oct. 15, Costa said the government would “work to build a good budget.”
The Bank of Portugal forecasts growth of 2.5 percent this year, up from 1.4 percent in 2016, while the government sees debt falling to 127.7 percent of gross domestic product in 2017 from 130.1 percent last year.
Portugal’s 10-year bond yield was at 2.4 percent on Friday, down from 4 percent six months ago. It peaked at 18 percent in 2012 at the height of the euro region’s debt crisis.
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