Portugal's government fears road tolls defeat heralds political paralysis

FILE PHOTO: Portuguese Socialist Party (PS) Secretary General Pedro Nuno Santos talks to the media after meeting with President Marcelo Rebelo de Sousa in Belem Palace

By Sergio Goncalves

LISBON (Reuters) - Portugal's new centre-right minority government has suffered its first setback in parliament as the far-right Chega party teamed up with the Socialists to end toll payments on eight motorways, imposing an unwanted increase in public spending.

The government fears Thursday's vote may be the start of political forces from the opposite ends of the spectrum working together to paralyse activity and force another election.

A coalition led by the centre-right Social Democratic Party (PSD) won the March 10 election by a slim margin over the centre-left Socialist Party (PS), and the populist, anti-immigration Chega quadrupled its seats in the most fragmented parliament in 50 years of democracy.

Analysts say the government may be short-lived, and that its first big test will be towards the end of the year when parliament will vote on the 2025 budget bill.

"We are watching with astonishment a new parliamentary pattern, in which the PS and Chega are colluding in a negative coalition to undermine government activity," Parliamentary Affairs Minister Pedro Duarte said late on Thursday.

He called the approved measure "a profound budgetary irresponsibility" as it will cost the state 180 million euros ($193 million) next year alone in compensation to concession-holders and a total of 1.5 billion euros by 2040.

The legislative proposal was presented by the PS, which governed Portugal for the last eight years and always rejected ending road tolls while in power.

The ruling PSD voted against. It has supported a gradual reduction of payments on the eight motorways rather than an abrupt end.

Socialist leader Pedro Nuno Santos said it was "unacceptable that the government should describe the normal work of parliament as a blockade," while Chega chief Andre Ventura said that "the government should feel less sorry for itself and govern more".

The government said on Thursday the public deficit was likely to increase once it has finished assessing the spending approved by the PS administration during its final months in power.

($1 = 0.9308 euros)

(Reporting by Sergio Goncalves, editing by Andrei Khalip and Barbara Lewis)