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GV EXTERIOR Journalists in line at Presidential palace
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SV INTERIOR MRC seated at table (3 shots)
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SV Newsmen
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SV New government members being greeted
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CU Government look on as Soares signs book
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SV PAN Ministers TO new Foreign Minister signing
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Initials CL/0332 CL/0340



Script is copyright Reuters Limited. All rights reserved

Background: Portugal's new provisional government--the fourth since the country's bloodless coup last April--took office in Lisbon today and confirmed Portugal on a left-wing course.

Speaking at the first meeting of the new cabinet, Prime Minister Vasco Goncalves said the country urgently needed a regime of total austerity, and served notice that the new government would continue its policy of nationalising basic sectors of the economy.

He said the nation was living above its means and that the first task of the new government would be to devise a programme to counter unemployment and produce a prices and income policy.

The new cabinet-enlarged from 17 to 21 members by the addition of four more officers from the ruling military Revolutionary Council-will also have the task of leading Portugal through its first elections since the coup. The elections are due in one month's time.

In the meantime, the Military Revolutionary Council retains supreme control of Portugal. It has power to dismiss any members of the cabinet and is the only instrument of policy-making in government.

The one major change in the make-up of the cabinet is the removal of Foreign Minister Mario Soares, who is also leader of Portugal's Socialist Party. He has been replaced by Major Ernesto Antunes.