LISBON, March 21, 2024 (BSS/AFP) - Centre-right leader Luis Montenegro was appointed prime minister of Portugal on Wednesday night, but will have to form a coalition government and grapple with a growing far right after his party's narrow victory in parliamentary elections.

The 51-year-old lawyer and veteran parliamentarian succeeds the Socialist Party's Antonio Costa, who was in power since 2015.

His Democratic Alliance (AD) had campaigned on promises to boost economic growth by cutting taxes, and to improve unreliable public health services and education, which have been hit by strikes by teachers and school workers over pay.

Montenegro will present his new government next Wednesday, with it due to take office on April 2, the newly elected leader told reporters after a meeting with President Marcelo Rebelo de Sousa.

Their meeting marked the end of the process of naming a new prime minister.

Montenegro's AD beat the incumbent Socialist Party (PS) in March 10 elections but won just 79 seats, far short of a majority in the 230-seat parliament.

Even with the backing of the tiny business-friendly Liberal Initiative (IL) party, the AD would still need the support of anti-immigration party Chega to reach a majority of 116 seats in the assembly.

- Growing far right -

The election was called after Costa, 62, unexpectedly resigned in November following an influence-peddling investigation that involved a search of his official residence and the arrest of his chief of staff.
 
The PS came second in the elections, with 28 percent of the vote and 78 seats in parliament.

Chega posted the biggest gains, winning 50 seats after taking just 12 in the last election in 2022, cementing its position in Portugal's political landscape.

But Montenegro has ruled out forming a coalition with Chega, saying he intends to form a minority government.

Chega leader Andre Ventura this week warned of political instability if the AD continued to reject a coalition, threatening to oppose it if Montenegro refused to open negotiations.

- Budget negotiations -

The autumn deadline for agreeing the state budget for 2025 will be Montenegro's first trial by fire.

The new Socialist leader Pedro Nuno Santos has said his party would refrain from bringing down a centre-right minority government, but warned it would vote against its first budget.

Santos said Tuesday that he was ready to vote on a budget amendment to increase the pay of teachers, police officers, nurses and court clerks, but that a favourable vote by the Socialist Party overall was "practically impossible".

Montenegro's new government will be "condemned to negotiation, because that is the fate of minority governments", political scientist Antonio Costa Pinto, of the University of Lisbon's Institute of Social Sciences, told AFP.

But it is not necessarily doomed to be an unstable government since "none of the players have an interest in triggering a crisis", he added.

In the event of political deadlock, President Rebelo de Sousa would mediate the negotiations.

Outgoing prime minister Costa said there would be "no change" to Portugal's foreign policy.

"Even Chega, unlike the far-right parties in other European countries, has never campaigned against the European Union or exploited any Eurosceptic attitude," Costa said at his last European Council meeting in Brussels.

Montenegro will also travel to Brussels to attend a meeting of the European People's Party on Thursday.