Portugal finance chief and eurogroup chair quits government

LISBON, Portugal (AP) — Portuguese Finance Minister Mario Centeno is stepping down from the government, though the prime minister insisted Tuesday that his policies of fiscal restraint and budget discipline will remain in place.

Centeno is credited with bringing Portugal’s budget deficit close to zero after it ballooned during Europe's financial crisis. That success has helped reassure international markets and other European countries that Portugal is no longer a threat to the continent's financial stability.

It also earned Centeno election as chief of the eurogroup meetings of eurozone finance ministers. His term there is due to end next month.

Centeno asked to leave and will be replaced by Secretary of State for the Budget Joao Leao, Prime Minister Antonio Costa told a news conference in Lisbon.

Costa said Leao will oversee “continuity in (the government's) policies.”

Joao Leao has been part of Centeno’s team at the finance ministry since Centeno took office in 2015. He is set to take office on June 15.

Centeno declined to say at the news conference what prompted his resignation and what his plans are.

Centeno, a graduate of Harvard Business School, is widely expected to take over as governor of the Bank of Portugal.

Portugal’s budget deficit stood at 0.2% of GDP last year, the lowest in more than four decades. The deficit fell from more than 11% in 2010, the year before it needed an international bailout of 78 billion euros. The financial discipline helped Portugal’s center-left Socialist government silence critics who feared the country would return to lax fiscal practices.

But signs of tension between Costa and Centeno had emerged in recent months, especially over another cash injection into a failed bank and over a post-pandemic economic recovery plan which Centeno reportedly wasn’t consulted about.

Centeno’s departure was announced after the Cabinet approved a rejigged version of the 2020 state budget to take into account an economic downturn triggered by the new coronavirus pandemic.