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Portugal punishes government for bailout in polls

Bloomberg/Contributor | Bloomberg | Bloomberg

Portuguese voters punished the ruling Social Democrats for painful austerity under an EU/IMF bailout, boosting opposition and independent candidates in municipal elections on Sunday.

Preliminary results and exit poll projections showed Antonio Costa from the main opposition Socialists was reelected mayor of Lisbon by a landslide, winning more than half the votes cast - an improvement of up to 10 percentage points on his 2009 result.

Independent candidate Rui Moreira became mayor of the country's second-largest city Porto, taking the post from the Social Democratic Party (PSD), which came a distant third.

"Judging by the first data, I think there's no mistake in saying the PSD has suffered a great defeat. What remains to be seen is whether the Socialists get all that the PSD has lost or divide it with independents," said Marques Mendes, a former PSD minister and commentator.

(Read more: Portugal back in the spotlight as bailout risks return)

With votes in hundreds of parishes yet to be counted, partial results showed the Socialists well ahead with 40 percent. The PSD was behind on 34 percent - though that was bolstered by the 7 percent scored by its coalition partner CDS-PP.

A record number of mayoral candidates were standing as independents in the first local election since Portugal turned to the International Monetary Fund and European Union for the 78 billion euro ($106 billion) bailout in 2011 - a sign of disenchantment with the traditional parties.

The bailout was agreed under a previous Socialist administration, but it was the following PSD-led coalition government that had to apply the budget cuts and tax hikes required under the rescue package.

"It's a heavy defeat, but we'll see only later whether the government gets weakened by it," Mendes added.

The government nearly collapsed in July over an internal dispute about measures that have included the biggest tax hikes in living memory. Big losses at the local level and a strong triumph by the opposition could sap the government's appetite for further action.

(Read more:Portugal's next bailout review could drop the compliments)

EU and IMF officials are currently reviewing the bailout and demanding more budget cuts.

President Anibal Cavaco Silva said the future of the current government was not at stake regardless of the local election result.

"It is clear that it (the government) does not depend on this, these are municipal elections," Cavaco Silva told journalists.

A record 80 independent candidates are standing for mayor in the 308 municipalities, up from 54 at the 2009 local elections.

Officials say some results may be delayed because the ballot is the first since many local councils were merged in an effort to cut costs. Final results may not be available until Monday.

(Read more: Portugal Prime Minister Defiant After Bond Yields Spike)

The Portuguese held out little hope their hardships will end soon.

"I know this is a municipal election and I don't really expect it to change much in terms of the government and its course, but hope is the last thing to die," said Rita Carvalho, 32, after voting at a busy Lisbon polling station.

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