Former PM Passos Coelho Warns Portugal's Government: Political Deal with Chega Essential for Real Reform

Portugal's former Prime Minister Pedro Passos Coelho has re-emerged from nearly a decade of political silence with a blunt message for the country's current administration: the Portuguese government should have locked down a legislative pact with both Chega and the Iniciativa Liberal (IL) to secure stability and push through the structural reforms the nation urgently needs.

Why This Matters

• Coalition Strategy: Passos Coelho publicly advocates for a formal agreement between Portugal's government and the two right-leaning opposition parties, a move that would reshape parliamentary dynamics.

• Political Speculation: After 8 years out of the spotlight, the ex-PM's sudden visibility—and his refusal to rule out a future candidacy—has triggered intense speculation about a possible return to lead the PSD (Social Democratic Party).

• Reform Agenda: He warns that Portugal has wasted years avoiding deep structural reforms, and that fiscal discipline alone is not enough to modernize the country.

Passos Coelho's remarks, delivered in a rare interview with the ECO news outlet, mark his first major public intervention since stepping down from the PSD leadership in February 2018. Over the past two weeks, he has appeared at multiple political events, stoking rumors of a comeback. His latest comments—delivered with the calm authority of a seasoned strategist—make clear he sees the current center-right minority government, led by PSD Prime Minister Luís Montenegro, as missing a critical opportunity.

A Lost Opportunity for Stability

The ex-premier did not mince words when asked about the Montenegro administration's approach to parliamentary negotiations. "The government should have sought [an agreement] between Chega and Iniciativa Liberal," he said. "Is it possible to build a legislative pact or not? Only time would have shown whether it was feasible or not, but it was desirable and should have been attempted."

His reasoning centers on clarity and accountability. Without a formal deal, Portugal's parliament has descended into what he calls "casuistic negotiation"—ad hoc, opaque deal-making that obscures who is responsible for what. "The game becomes less clear for people," he explained. "When elections come, voters will have a harder time judging what happened."

Passos Coelho argued that even a failed attempt at a pact would have paid dividends. If Chega and IL had refused, their voters would have held them accountable for blocking stability. If they had agreed, Portugal would be in a far stronger position to implement the reforms he believes are overdue.

This stance is particularly striking given the fraught political landscape. Iniciativa Liberal has maintained a "cordon sanitaire" around Chega, refusing formal power-sharing arrangements even at the municipal level. The party's national executive approved a resolution in late 2025 declaring cooperation with Chega a red line that "cannot be crossed." Meanwhile, Chega, under leader André Ventura, has positioned itself as a "preferential partner" to the government, demanding public negotiations and proposing a parliamentary commission on state reform—which Ventura suggested Passos Coelho himself could chair.

"When I Want to Run, I'll Run"

Passos Coelho's sudden visibility has naturally sparked questions about his own ambitions. His answer was characteristically direct: "When I want to run for office, I will run, and I will announce it."

He dismissed any suggestion that he is maneuvering behind the scenes. "I am on good terms with politics and on good terms with the country," he said. "I am not looking for anything in particular, I have no scores to settle, no need to prove or show anything." But he also refused to rule anything out. "I feel no need to exclude anything I might do in the future. Why would I?"

The ex-PM acknowledged that his recent public statements have made some people "nervous" but said he sees no reason to stay silent. "There are people who express a certain discomfort, or a certain nervousness, because I speak out on national policy issues," he said. "I'm sorry it's like that, but I have no explanation for it."

He added that he will continue to intervene publicly whenever he deems it useful, insisting his obligations to the country did not end with his time in office. "I will not stop making calls to attention out of fear that people might think I am going to run for something," he said.

The Reform Deficit

At the heart of Passos Coelho's critique is a conviction that Portugal has squandered precious time. "There is a great urgency to reform the country," he said. "Politically, this is decisive, because the country has spent too many years without looking at this reformist dimension of public policy."

He acknowledged that Portugal has achieved fiscal discipline—a goal his own government fought for during the 2011-2015 bailout years—and that this prevented a repeat of the economic crises that have plagued the nation. "Apparently, that lesson was well learned, and rightly so, so that we do not have to bear the gigantic costs of that indiscipline again," he said.

But he warned that staying out of bankruptcy is not the same as progress. "One thing is not being on the brink of collapse, another is wasting the political conditions that people sought to create when they expressed a desire for change—precisely to reform the country, to return to a reformist vision. And the PSD sold the elections with that mission. That was the message."

The Portuguese government, a coalition between PSD and the smaller CDS-PP, has outlined an ambitious program for 2026. It includes an IRS tax cut of €800M over two years, a reduction in corporate tax from 21% to 17%, and a minimum wage increase to €920. The administration has also promised universal childcare from 6 months to 5 years, an end to health service waiting lists, and new public-private partnerships in the National Health Service (SNS). The 2026 State Budget forecasts a GDP growth of 2.3% and a budget surplus of 0.1% of GDP, with the debt-to-GDP ratio falling to 87.8%.

Yet Passos Coelho's message is clear: legislative instability is undermining the government's ability to deliver on those promises.

What This Means for Residents

For people living in Portugal, the implications of this political standoff are tangible. Without a stable parliamentary majority, the Montenegro government is forced to negotiate every major policy initiative on a case-by-case basis—an exhausting process that slows down reforms and dilutes accountability.

The 2026 State Budget passed only because the Socialist Party (PS) abstained; Chega and IL both voted against it. On housing legislation in February, the government secured IL's support, but the pattern of ad hoc coalitions makes it difficult for voters—and markets—to predict what comes next.

If Passos Coelho's warning proves prescient, the next election could see a dramatically different outcome. He predicts that if the PSD loses power, it will not be the Socialists who win. "It is very unlikely that, on the day the PSD loses the elections, the Socialist Party will win them," he said. "Most likely, it will be Chega. It is the party closest to being able to gather any discontent generated by the exercise of governmental power, even if the President of the Republic is from the socialist area."

In practical terms, that scenario would likely mean tougher immigration controls—Chega has prioritized revising Portugal's immigration and nationality laws after previous bills were struck down by the Constitutional Court—and a more confrontational approach to the European Union. The party has also demanded increases in funding for the Defense and Internal Administration ministries and has called for a new labor law.

For Portugal's foreign residents, digital nomads, and investors, the stakes are high. A government led by or dependent on Chega would likely adopt policies more skeptical of immigration and less aligned with the liberal economic agenda that has attracted international talent and capital to Lisbon and Porto in recent years.

A Waiting Game

For now, Passos Coelho remains on the sidelines—watching, commenting, and keeping his options open. Whether he will return to front-line politics remains an open question. But his message to Portugal's current leadership is unambiguous: negotiation is not a sign of weakness, it is a prerequisite for reform. And without reform, he warns, the country risks slipping backward—fiscally sound, perhaps, but structurally stagnant.

His intervention has already shifted the terms of debate in Lisbon. Chega's Ventura has seized on the idea of a state reform commission, framing it as a potential area of consensus with the PSD and IL. Whether that translates into a formal legislative pact remains to be seen. But for a country that has spent the better part of the last year navigating parliamentary gridlock, Passos Coelho's call for clarity and ambition has struck a nerve.