The general election was the first since Portugal exited an worldwide bailout previous year.
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But there remains substantial opposition to austerity, and cobbling together a viable government will be tough.
Mr. Passos Coelho said late Sunday he would seek an accord with the Socialists to allow him to form a minority government and pass legislation needed to sustain Portugal’s recovery from a punishing recession.
“All I know is something’s got to change”, he said. Four seats to be decided by votes from overseas will be decided by October 14. Projections indicated the government would likely to fall short of earning an outright majority in Parliament, which required 44 percent of the vote.
Another coalition appears inevitable, and the drop in support means Passos Coelho may have to soften a few policies.
Passos Coelho’s Forward Portugal (PàF) coalition received 40.2 percent of the vote with 93 percent of ballots counted, ahead of the main opposition Socialist Party (PS) on 32 percent. However the constitution does not specify how the president picks the victor, whether by the number of votes or the number of lawmakers elected to parliament.
In this light, he was willing to forge “the necessary agreements to implementing major reforms”.
The election outcome “wasn’t so much a victory for the government as a defeat for the Socialists”, said Antonio Barroso, a London-based analyst with the Teneo Intelligence political risk consulting group. Portugal “has come out of its coma but is still under observation”.
His Socialist predecessor, Jose Socrates, had just asked for bailout from the European Union and the global Monetary Fund.
In May 2014, Portugal exited its bailout program ahead of schedule. The jobless rate has fallen to close to 12% from a peak of 17%, and gross domestic product is expected to grow 1.6% this year. One in five Portuguese continues to live below the poverty line with an annual income of less than €5,000. Most of the rest of the vote will go to two further left parties, the Democratic Unity Coalition (CDU) and the Left Bloc, which look like at least maintaining their current representation of 16 and eight seats respectively.
“It was like a reality TV show – the first time the financial and economic elite of the country were made to face up to their responsibilities”, said Mortagua, one of the party’s leaders, who is heading its list of candidates in the capital Lisbon.
Southern European bonds outperformed euro zone peers on Monday after Portugal’s ruling centre-right coalition won re-election and Standard & Poor’s upgraded Spain’s credit rating. That rescue averted the bankruptcy that loomed during the eurozone financial crisis as lenders cut off credit – scared away by the country’s massive debts following years of government overspending.
On the streets of Lisbon, locals were wary about the future.
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“I lost my trust in the Socialist Party when they left us almost bankrupt”, she said.
