Portugal PM Passos refuses to quit after two resignations Published duration 2 July 2013

media caption Prime Minister Pedro Passos Coelho: "I won't abandon my country"

Portugal's Prime Minister Pedro Passos Coelho has said he will not stand down, despite the resignation of two key members of his government in as many days.

He said he would not abandon his country, hours after Foreign Minister Paulo Portas announced his resignation.

On Monday, Finance Minister Vitor Gaspar stepped down, pointing to public opposition to austerity measures.

Portugal's borrowing costs rose and stock market fell 6% on Wednesday.

Portugal is struggling to meet the terms of the 78bn-euro bailout it negotiated in 2011, and the markets apparently fear that political uncertainty could throw efforts to consolidate its finances off course.

"I won't give up on my country," the Social Democrat PM said in a televised address on Tuesday.

He also said he had not accepted the resignation of Mr Portas, whose CDS-PP party is a junior member of the centre-right coalition.

Political commentators immediately responded with scepticism to the idea that the foreign minister could stay on in government, BBC Lisbon correspondent Alison Roberts reports.

Mr Portas was given the task of overseeing budget cuts when the finance minister resigned on Monday.

"The prime minister chose to follow the path of continuity at the finance ministry," Mr Portas said in his letter of resignation on Tuesday.

"I respect this choice but I disagree. I expressed this view to the prime minister who nevertheless confirmed his choice."

Anti-austerity sentiment

The coalition has found it difficult to meet the terms of the bailout agreed in 2011 by the former Socialist government, with austerity measures blamed for causing Portugal's worst economic crisis since the 1970s.

Portugal has been in recession for two years and the economy is expected to contract by 2.3% this year.

Unemployment stands at over 17.5%, with thousands of higher-educated people seeking work abroad.

The government has also become increasingly isolated with the country's two main trade union federations joining forces to organise a general strike last week, which brought public transport to a halt.

Business confederations have called on the coalition to ease austerity measures.

The coalition came to power two years ago in early elections following the collapse of the Socialist government, which requested the bailout from the IMF and EU after admitting their own policies had failed.