LISBON (Reuters) - President Anibal Cavaco Silva proposed an urgent cross-party agreement between the ruling coalition and opposition Socialists on Wednesday to ensure Portugal can complete adjustments under a bailout by June 2014 before holding early elections.
The president's proposal could prolong uncertainty since it was not the simple approval that had been expected of a cabinet reshuffle by the prime minister to mend a rift in his coalition.
Cavaco Silva said he foresaw the government remaining in power until the elections but he made no clear statement about the reshuffle by the ruling Social Democrats and their junior partner, the CDS-PP party.
He did not specify whether the reshuffle, which would need the president's approval, would take place.
The president said a cross-party deal would have to include a calendar for early elections, whose preparation must coincide with Portugal's planned exit from the bailout in June 2014.
"I will give my firm support to this deal, which in the current emergency truly represents a commitment of national salvation," he said in a televised address.
The Social Democrats said they would consider the president's statement before responding, adding that the government will continuing performing its duties.
The rift in the ruling coalition emerged last week after the resignation of the CDS-PP leader as foreign minister and has threatened to derail Portugal's progress under the 78-billion-euro ($100.3-billion) bailout by the European Union and IMF.
The Socialists had urged the president to call a snap election, but he has so far declined to do so.
"It must be a medium-term deal that assures that the government that emerges from the next election has the commitment of three parties to assure governability, debt sustainability...and job creation," Cavaco Silva said.
"This agreement does not imply much technical complexity and can be reached quite quickly, possibly with recourse to a recognized and prestigious personality to promote dialogue," he added.
Austerity under terms of the bailout has pushed Portugal into its deepest economic slump since the 1970s and boosted unemployment to record levels near 18 percent.
Portugal's 10-year bond yield jumped to over 8 percent last week from around 6.4 percent, but has since settled back as the coalition tried to resolve the crisis.
(Reporting by Shrikesh Laxmidas and Daniel Alvarenga, Editing by Axel Bugge and Michael Roddy)
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