Portuguese political noise threatens to derail bailout

President Aníbal Cavaco Silva on Monday called on all Portuguese to put their shoulders to the wheel as public squabbling by the country's two main political groups ahead of the general election on June 5 threatened to stymie negotiations on the terms of a rescue package for the debt-ridden nation.

"This is a moment for unity and cohesion," Cavaco Silva said in a speech. "We are living in difficult times, in which sacrifices have to be shared by everyone, in which no one can seek to exempt themselves from the contribution required to overcome the current difficulties."

At a Socialist Party meeting on Sunday, Prime Minister José Sócrates accused the main opposition Social Democrat Party (PSD) and other groups of "irresponsibility" in bringing down his government by voting against a package of deficit-reduction measures on March 23.

European leaders said last week the austerity measures that would be required of Portugal would be tougher than those rejected last month.

In response to Sócrates' remarks, PSD leader Pedro Passos Coelho accused the Socialists of having presided over six years of economic mismanagement, in which foreign debt and unemployment had doubled.

Passos Coelho indicated the country should agree a short-term package with the IMF and the EU to tide the country over and leave negotiations for a more "substantial" longer-term loan to the incoming administration.

Later Monday, Cavaco Silva issued a statement saying he had completed a round of contacts with the country's opposition parties on the "serious economic and financial crisis" the country is facing. The president underscored "the urgent need to obtain external assistance to assure the funding of the state and the economy."

European Commission spokesman Amadeu Altafaj said Monday a "technical evaluation" team from the the International Monetary Fund, the Commission and the European Central Bank would begin work in Lisbon tomorrow. The IMF said that would form the basis for "policy discussions" beginning on April 18.

Portugal's sovereign debt remained under pressure in the secondary markets, with the yield on the five-year government bond at one point moving back above 10 percent. Portugal faces heavy bond redemptions and coupon payments on April 15 and June 15, amounting to some 9 billion euros.