Mainstream Portuguese moderates expected to prevail in vote

LISBON, PORTUGAL: Moderate mainstream parties were expected to triumph in Portugal's general election Sunday, after more radical alternatives failed to exploit public discontent over austerity measures.

The center-right coalition government was close to re-election, opinion polls indicated, despite enacting tax increases and cutting pay, pensions and public services over the past four years.

Those policies were part of a eurozone plan to restore the 19-nation bloc's financial health following its debt crisis. The government has warned the country can't afford to go back to the borrow-and-spend programs of the past and must remain frugal till its debt load is lower.

The government's closest rival was the center-left Socialist Party, the main opposition force, which also accepts eurozone financial rules but promises to start easing the tax burden and speed up growth through domestic consumption.

Unlike in some other eurozone countries, no prominent radical parties fighting austerity have emerged during the tough times. Protest votes traditionally go to the Communist Party, which is expected to achieve its usual support of around 10 percent of votes, and the newer Left Bloc, forecast to poll around 5 percent.

The Communist Party wants Portugal out of the eurozone. The Left Bloc wants to renegotiate the national debt, demanding better repayment terms from creditors, and end austerity measures while increasing corporate tax.

A handful of grassroots anti-austerity parties have barely registered in opinion polls.

Portugal was close to bankruptcy during the eurozone financial crisis and needed a 78 billion-euro ($87 billion) bailout in 2011. The subsequent government spending cuts and tax hikes helped propel Portugal into a three-year recession.

But this year the economy is improving, and incumbent Prime Minister Pedro Passos Coelho says austerity is paying off. The economy grew 1.5 percent in the first half of this year compared with the same period in 2014. The unemployment rate has fallen from a record 17.7 percent in 2013 to 12.3 percent last July.

Even so, government debt remains high at almost 130 percent of gross domestic product — the third-highest in the European Union. Portugal is Western Europe's poorest country in financial terms and recorded average growth of less than 1 percent in first decade of the century. Its economy is still frail, and any political instability could quickly derail the recovery.

Portuguese President Anibal Cavaco Silva, who has no executive powers, said the elections "take place at a crucial time for the country."

"We face some very complex challenges," he said in a televised address to the nation Saturday night.

Austerity-minded governments in other eurozone countries have felt a backlash at the ballot box, but the Portuguese don't appear to have any appetite for political upheaval after the recent turbulent times.

Analysts have noted that by committing itself to eurozone financial rules the Socialists have little room for maneuvering in their economic policy proposals.

Also, the Socialists were in power for six years up to the near-bankruptcy, leaving them vulnerable to accusations of poor economic management.

Socialist leader Antonio Costa says it's time to "turn the page on austerity." Among other measures, he wants to lower the restaurant sales tax from 23 to 13 percent, bring back four public holidays that were abolished to improve productivity, and restore slashed government workers' pay.

A worry for investors is that the result could bring in a minority government that has no guarantee of passing its policies. The quest for the main parties is to collect an outright majority of 116 seats in the 230-seat Parliament.