Passos Coelho in rush to form government to meet bailout terms

Portugal's prime minister-elect Pedro Passos Coelho on Monday launched his bid to fast-track the formation of a new government to implement the conditions of the country's bailout package after his center-right Social Democrat Party (PSD) won Sunday's general election.

Passos Coelho's first official meeting was with President Aníbal Cavaco Silva, who urged him to put together a government that was in a position to "deal with the serious economic and social situation" facing the country. The 46-year-old PSD leader will need the support of the conservative Social Democratic Center (CDS-PP) after falling 11 seats short of an absolute majority in Portugal's single-chamber parliament.

Cavaco Silva urged Passos Coelho, who declined to make any comment following his meeting with the president, to inform him of the outcome of his talks with the CDS-PP before the official election results are published on June 15. The PSD needs to get the government up and running quickly in order to put in place a series of requirements imposed by the International Monetary Fund and the European Union as part of the 78-billion-euro bailout agreement before the end of July.

"Portugal needs to return to creating a wave of confidence in the markets," Passos Coelho said in remarks to Reuters. "I think we can pull off a surprise and go beyond the [bailout] agreement." He said he needed to form a government in coalition with the CDS-PP "in record time" so that "all deadlines in the agreement can be respected."

Meanwhile, the defeated Socialist Party (PS), which suffered its worst election result in 20 years with only 28 percent of the vote, compared with the PSD's 38.7 percent, began the process of replacing outgoing Prime Minister José Sócrates, who stood down as party leader. The chairwoman of the PS, Almeida Santos called a meeting of the PS national committee to analyze the outcome and start preparing for primaries to elect a successor to Sócrates.