Overview

Passos Coelho's political program was considered by the Portuguese left (Partido Socialista (PS) and its communist political allies), which had governed the country during most of the time until the financial collapse of 2010, as strictly aligned with economic liberalism^[18] and included a firm intention to accomplish the European Union/IMF-led rescue plan for Portugal's sovereign debt crisis. The rescue plan included widespread tax increases and reforms aimed at better efficiency and rationalized resource allocation in the public sector, to reduce the number of unnecessary civil servants and chronic public sector's overcapacity.^[19] They also included the privatization of at least one channel of the public radio and television RTP network,^[20] the Caixa Geral de Depósitos' insurance operations (including Fidelidade), and some parts of the National Service of Health.^[21][22]

His coalition partner Paulo Portas of CDS-PP, publicly expressed his disapproval of some of Passos Coelho's proposals.^[23] Passos Coelho entered office as a moderate social conservative, with a mixed record on abortion (he voted no in the 1998 referendum and yes in the following in 2007), while opposing euthanasia^[24] and same-sex marriage, supporting same-sex civil unions instead.^[25] It was not certain if he would try to overrule the previous José Sócrates-led Socialist government laws that allowed abortion until 10 weeks and same-sex marriage in Portugal. During the campaign, he admitted the re-evaluation of the current abortion law^[26] approved in 2007, after a referendum, that allowed it under any circumstance until 10 weeks of pregnancy.

The law was deemed unconstitutional by 6 of the 13 judge members of the Portuguese Constitutional Court. Other creations of the previous cabinets led by former Prime Minister José Sócrates were criticized by Passos Coelho, including the state-sponsored Novas Oportunidades educational qualification program for unschooled adults, which was dubbed a fraud due to alleged low standards of intellectual rigor and academic integrity.^[27] Pedro Passos Coelho and his government cabinet launched the foundations of the Banco Português de Fomento Group and established Portugal's state-owned venture capital and private equity investing arm Portugal Ventures.^[28]

Passos Coelho's cabinet

From 21 June 2011 to 26 November 2015, Passos Coelho led the XIX Governo Constitucional (19th Constitutional Government) and the XX Governo Constitucional (20th Constitutional Government). In the fifth vote of confidence the government faced, as called by Os Verdes, the government was scheduled to win a vote despite being opposed by the Communists, Left Bloc and Socialists (if it failed the government would not be able to have another vote). Despite attempts to form a national unity government, Socialist party whip Carlos Zorrinho said that the move was not with the government but that all parties were available for a possible new government. The motion by Os Verdes was initiated on 14 July 2013 during a state of the nation debate. Coelho said that the vote was "very welcome" and would serve as a vote of confidence.^[29]

Membership

In July 2013, Paulo Portas and Vítor Gaspar resigned from the cabinet over the country's austerity programme. Though Coelho accepted it, he said that the government would continue with the measures and would seek to heal the rift with his coalition partners.^[30] Portas eventually retracted his resignation, and became deputy prime minister.

Major policies

To accomplish the European Union/IMF-led rescue plan for Portugal's sovereign debt crisis, in July and August 2011, his government announced it was going to cut on state spending and increase austerity measures, including additional tax increases, but it will also have a social emergency package to help the poorest citizens. As time went on it became increasingly clear that a series of supplementary measures would be taken during the course of the year as a means to restrain an out-of-control budget deficit. These included sharp cuts in spending on state-run healthcare, education and social security systems. His cabinet enforced reforms of the local administration to save money by avoiding unnecessary resource allocation and redundancy. This included extinguishing the 18 Civil Governments (Governo Civil) located across the country^[31] and a large number of parishes.^[32] According to the Instituto Nacional de Estatística, there were 4,261 parishes in Portugal in 2006. The reform implemented according to Law 11-A/2013 of 28 January 2013, which defined the reorganization of the civil parishes, reduced the number of parishes to 3,091. Nevertheless, due to Portugal's legal constraints^[33] avoiding planned job cuts like those made across several developed countries at the time to fight overspending and overstaffing at municipality level,^{[34][35][36][37]} the 2013 mergers eventually increased the spending with the parishes.^[38]

• Public servants: the government wanted to sharply reduce the number of public servants and to achieve this it created a special mechanism to cut jobs by mutual agreement. Due to the unsustainable and growing expenses with public servant salaries and privileges, the ruling party PSD said it would only hire one worker for each five that leave, a rule which revealed the extremely large number of unnecessary redundant public servants that had been signed in across the decades. Hiring procedures for the public service were changed to guarantee an independent process and public servants' wages were taken into account to limit extra payments. On 18 October 2011, the Portuguese Minister of Finance, Vítor Gaspar, said to the Portuguese television RTP 1 that the wage cuts imposed to public servants the previous week in the presentation of the State Budget for 2012 were the only way to avoid a much more painful and complex policy of public servant mass firing. He said that if wage cuts were not enforced, it would be necessary to get rid of about 100,000 public servants immediately (under the terms of the law, Portuguese public servants were shielded from unemployment, so a number of special derogations would be needed to achieve this).^[39] In November 2015, the Socialist Party announced it would terminate with Passos Coelho-era reassignment program for public sector employees which included planned job cuts, called Mobilidade Especial, later Requalificação.^[40]
• Public administration: since the beginning the government promised to disclose within 90 days the list of public entities which were to be eliminated, reintegrated in other public institutions or be privatised due to their uselessness. These included dozens of financially strapped public institutions, foundations and public companies at a local, regional and national level, which were considered ineffective and futile and prone to overspending and overstaffing.
• Taxes: tax rise. Higher indirect taxes, like VAT (IVA), for almost all goods and services.
• Labour: Labour laws were also altered, but most of the changes could not affect current workers due to the leftist, labor movement-inspired Portuguese Constitution of 1976 and its Court (the Tribunal Constitucional), only those starting a new job from there on, while some public holidays were moved from mid-week to Mondays or Fridays to avoid typical extra-long bank holiday weekends. Faced with growing unemployment and hoping to avoid greater public unrest, the government cut the time needed to qualify for unemployment benefits from 15 to 12 months, but reduced the benefit period from 30 to 18 months and created new rules which reduced the monthly unemployment benefit granted to each unemployed citizen.
• Privatisations: release of state ownership on the utility Energias de Portugal (EDP), the grid management company REN – Redes Energéticas Nacionais, the financial institution Banco Português de Negócios and the flag carrier TAP Air Portugal by the end of 2011. The insurance company of the public bank Caixa Geral de Depósitos (CGD) was also for selling. Revenue from the sale of other parts of CGD was to be used to beef up the bank's capital ratios and its ability to lend to companies. Besides this, the government kept the promise to withdraw its special rights (golden shares) in companies such as Portugal Telecom.
• Finance: The creation of a development bank was defined as a priority by Prime Minister Pedro Passos Coelho in the parliamentary debate that began the activities of the remodeled XIX Constitutional Government of Portugal's cabinet on July 24, 2013, an installation commission was soon created that allowed the Council of Ministers, in October 2014, to formalize the creation of the Financial Development Institution (IFD - Instituição Financeira de Desenvolvimento) which was the percursor of the Banco Português de Fomento. Portugal Ventures, a state-run venture capital and private equity organization which would later become part of the Banco Português de Fomento group, was also founded in 2012 by Passos Coelho's cabinet.
• Transports: the Lisbon-Madrid high-speed rail line was put on hold. The decision was taken bearing in mind the cutting cost measures and the contracts that had already been signed. Transport providers like the Lisbon (Carris) and Porto bus companies and subway systems were also assessed to see if and when they could be sold off. The government programme also added that the road and rail transport companies, like Comboios de Portugal, "urgently need" to solve their chronic operating deficits and growing debts. On 8 December 2011 tolls were introduced in four shadow toll highways and in 2012 more than 300 km of railways were closed (to all traffic or to passenger only).
• Regulators: the regulatory bodies were turned into independent authorities with their officials being chosen through a process which comprises the government, the parliament and the presidency.
• Media: the media company owned by public broadcasting corporation RTP was to be restructured as early as 2012 to halt costs, and the privatisation of one of the two TV channels it owns (RTP1 and RTP2) was also on the table. Lusa news agency was also to be reorganised, following the state's goal of rethinking its position in regard to the national media.
• Monitoring measures: the government created a special unit to monitor the measures agreed with the so-called international troika composed by the International Monetary Fund, European Commission and European Central Bank. This special unit was subordinated to Carlos Moedas, the deputy secretary of state of Prime Minister Passos Coelho.
• Health: Public hospitals were turned over to private management "whenever this is more efficient, maintaining the essentially free health care services". The fees and taxes a citizen had to pay to use the national health service were substantially increased.
• Foreign affairs: Passos Coelho's cabinet enforced international relations policies directed towards increased economic relations with Portuguese-speaking countries like Angola and Brazil, as well as supporting openly the creation of an economic and fiscal government for the European Union. The government also supported a State-backed emigration policy to help unemployed and underemployed citizens who wish to flee rampant poverty and social regression, to find a job in foreign countries.^[41][42] On the other hand, the government created programs that issued residence permits to wealthy foreign investors, entrepreneurs and skilled workers in high demand.^[43]
• Social integration: In 2013, the XIX Constitutional Government of Portugal, led then by Prime Minister Pedro Passos Coelho, passed the National Strategy for the Integration of the Romani Communities, creating a Consultative Group for the Integration of the Portuguese Gypsy Communities.^[44][45]

The Portuguese Constitutional Court, with the praise of most unions and opposition party leaders, eventually rejected the equivalent to 20% of the government austerity policies proposed by Passos Coelho and his cabinet.^[46] Most of the rejected proposals were related with labor market flexibility, public pensions' sustainability, civil servants' privileges and job cuts in the civil service.^{[33][47][48][49]}