Portugal's president invites caretaker PM to lead new government

LISBON (Reuters) -Portugal's president named Luis Montenegro, head of the centre-right Democratic Alliance (AD) that won a snap national election on May 18, as the prime minister on Thursday and invited him to form his second minority government, the presidency said.

The AD won 91 seats in the 230-seat parliament - 11 more than in the previous legislature, but still far from a working majority - in an election marked by far-right party Chega replacing the Socialist Party (PS) as the main opposition force.

Montenegro, who first came to power in March 2024, has refused to make any deals with the anti-establishment, anti-immigration Chega, which garnered 60 seats, two more than the PS after the latter's worst showing in four decades.

The office of President Marcelo Rebelo de Sousa said in a statement after he consulted the three main parties on Thursday that Montenegro would announce his new government after parliament convenes for its first session.

No confirmation vote is required, although any party can present a motion of rejection.

The election, the third in as many years, was called after Montenegro failed to win a vote of confidence in March when the opposition questioned his integrity over dealings of his family's consultancy firm.

He has denied any wrongdoing and voters ended up punishing the PS for its role in bringing down Montenegro's government, in what many people saw as an unnecessary election.

Parliament is expected to enable the new government on its return next week. PS's interim leader, Carlos Cesar, promised his support in that initial step.

While the government's first big test is likely to be the 2026 budget towards the end of the year, no new parliamentary poll can be called until at least mid-2026 because Portugal will hold a presidential election next January.

Although that doesn't guarantee political stability, the centre-left PS's weakened position is likely to make them a more amenable opposition with more affinities with the AD than with Chega, analysts say, seeing little danger of a legislative paralysis in the medium term.

(Reporting by Andrei Khalip and Sergio Goncalves. Editing by Mark Potter)