Portugal's president disbands parliament, calls election on May 18

By Andrei Khalip and Sergio Goncalves

LISBON (Reuters) -Portugal will hold an early parliamentary election - its third in just over three years - on May 18, President Marcelo Rebelo de Sousa said on Thursday, two days after the centre-right minority government lost a parliamentary confidence vote.

The president made the widely-expected decision to disband parliament and call the national ballot after consulting the main political parties and his advisory Council of State, which includes representatives of the main political parties and which he said unanimously opted for the need of a snap election.

The government has assumed a caretaker role until a new parliament is formed.

Prime Minister Luis Montenegro presented the confidence motion last week after the opposition threatened to establish a parliamentary inquiry into his family's data protection consultancy, arguing that its contracts with private companies have benefited Montenegro as premier.

Montenegro has denied any conflict of interest or ethical shortfalls. Prosecutors are studying some allegations, but there is no active investigation underway.

Rebelo de Sousa said the election was something "most likely no one expected or wanted", lamenting that the crisis around Montenegro's company and how it unfolded will inevitably feature in the electoral campaign and calling for a "clear, direct, but calm, dignified electoral debate".

Montenegro's Social Democratic Party has rallied around him and said he will lead them in the election, pinning the blame for the crisis on the opposition, although many political analysts say another early election is Montenegro's fault, and some opinion polls indicate he may have lost most voters' trust.

Surveys in the past week show the main opposition Socialists taking a slight lead over the alliance led by Montenegro, but most show them neck-and-neck at around 30%, which would mean little change from last year's election. This has raised concerns that a national ballot would only perpetuate political instability.

The far-right Chega is steadily polling third, but somewhat below last year's result of 18%, which analysts attribute to scandals involving several senior party members.  

Despite the political upheaval of the past four years, Portugal has shown stronger economic growth than most EU states, posting budget surpluses and reducing its debt under the centre-right and centre-left governments, and economists see few immediate risks to its performance from another election.

With voters frustrated at politicians who force them into successive elections but fail to ensure government stability, analysts expect abstention to increase this time.

Last March, a record 6.47 million people went to the polls, an increase of around 900,000 voters from 2022 which benefitted the anti-establishment Chega, according to analysts.

(Writing by Andrei KhalipEditing by Alexandra Hudson and Alistair Bell)