Portugal's new coalition government took office on Tuesday (21^st June 2011).  

Pedro Passos Coelho was sworn in as prime minister of a coalition administration made up of his center-right PSD (Social Democratic Party) and the conservative (CDS-PP) Popular Party, who's leader is Paulo Portas.

The election earlier this month ousted Jose Socrates and the centre-left (PS) Socialist Party, which ran the country over the past six years.

Portugal is in a recession that is predicted to last through 2012, and unemployment is at a record 12.4 % following a decade of slow growth when the country ran up big debts.

The new government must move quickly to carry out the austerity measures and economic reforms, which have been agreed with the EU and the IMF in exchange for the €78 billion Bail Out fund.

Passos Coelho said that his priorities were restoring the country's fiscal health, ensuring fresh growth and more jobs, and helping the needy who are suffering from austerity measures. He said in a speech. "We are living through hard times and more difficulties await us." "The challenges we face are enormous."

The outgoing PS government introduced tax rises and pay and social benefit cuts to reduce the countries debt, but additional austerity measures are still needed to meet targets established in the bailout plan. Also, the government needs to introduce reforms in key areas, such as the justice and education systems, which for years have resisted change.

So far, Portugal has not seen any of the violent protests that have been seen in Greece, any stike action has been peaceful and friendly. In addition to this, parties that supported the bailout terms took 80% of the vote in the June 5th election, and all parties have agreed to work together to achieve the financial goals.

The government is starting to sell off state owned companies and shares to raise funds. Government owned TAP Air Portugal, a 20% stake in EDP, and a 49% stake in electricity distributor REN are targeted for privatization by the end of the year, along with the BPN bank.

Passos Coelho, 47, has never held a government post. He has put together a slimmed-down government with just 11 ministers, 5 less than the previous administration. The cabinet has the youngest agerage age since the Revolution of 1974. Key members of the administration come from outside politics in an apparent attempt to break the grip of lobbies, but with them they bring a wealth of business and academic experience.