Portuguese political leaders on Wednesday began discussing the possible formation of a coalition government that would command enough votes in Parliament to ensure the enactment of austerity measures promised in return for the country's euro78 billion bailout.
Portugal is trying to free itself from a ruinous debt burden that has pitched the economy into recession and driven unemployment to a record 12.6 percent.
It has pledged tax hikes and pay and spending cuts, and far-reaching social and economic reforms, in return for the financial rescue package provided by Europe and the International Monetary Fund. Any sign the new government is failing to abide by the country's commitments could further complicate Europe's sovereign debt crisis.
Pedro Passos Coelho, leader of the center-right Social Democratic Party which won the most seats in last weekend's general election, opened talks with Paulo Portas, head of the smaller, conservative Popular Party.
Together, the two parties have 129 seats in the 230-seat Parliament, giving them an overall majority and the power to pass debt-reduction policies and economic reforms.
The Social Democrats, who unseated a six-year Socialist government, collected 105 parliamentary seats in Sunday's ballot. That means opposition parties could potentially group together to defeat its plans if it governs alone over its four-year term.
Greece, which also took a bailout, is struggling to ensure parliamentary endorsement for a new set of austerity measures amid protests and strikes. Portuguese trade unions have also vowed to demonstrate against austerity measures.
Both the Social Democrats and the Popular Party have endorsed the bailout remedy to dig Portugal out of its debt hole, and they have governed in coalitions in the past.
Passos Coelho, who has never held a government post, is expected to become prime minister. Portas is tipped to be foreign minister.
The leaders said in a brief written statement after two hours of talks that their delegations would continue the negotiations over coming days.
Portas wrote on his Facebook page that Portugal's needs are pressing. "The negotiations ... cannot be protracted," he wrote.
The new government has no time to lose as Portugal must enact more than 200 measures over the next two years as part of the bailout agreement. A slate of money-raising privatizations is due to take place before the end of the year. They include state airline TAP Air Portugal, airport management company ANA, and the freight division of the national rail company.
President Anibal Cavaco Silva, mostly a ceremonial figure, says he wants to swear in Passos Coelho as prime minister in time for a June 23 European Union summit.