With one in ten voters still undecided according to recent polls, the prospect of another weak minority government is likely.
Portugal votes in a tight election, with no party expected to garner a majority in parliament in a fragmented political landscape that could see the far right make huge gains.
Ballot stations opened on Sunday at 0800 GMT (8AM) and close at 8PM, with exit poll results expected a few hours later.
A late surge by the opposition centre-right PSD party has clawed away the ruling Socialists’ once comfortable poll lead, with the two sides in a statistical tie according to final surveys.
With one in ten voters still undecided according to recent polls, analysts said the outcome of the election in the nation of around 10 million people is wide open.
The prospect of another weak minority government comes as Portugal is trying to boost its tourism-dependent economy which has been badly hit by the coronavirus pandemic.
A stable government is needed for Portugal to make the most of a $18.7 billion package of EU recovery funds it is due to receive by 2026.
Sunday’s snap polls were called after two far-left parties that had propped up Costa’s minority government sided with right-wing parties to reject his 2022 draft budget in October.
Coalition with far-right?
If the Socialists again garner the most votes but lack a majority, Costa has said he plans to govern alone by negotiating support from other parties for laws on a case-by-case basis.
Such a government would have “little chance” of lasting until the end of its term in 2026, said Lisbon University politics professor Antonio Costa Pinto.
Under Costa’s watch Portugal has rolled back austerity measures, maintained fiscal discipline and slashed unemployment to pre-pandemic levels.
But the PSD’s Rio says the economy should expand faster. It proposes corporate tax cuts to spur growth.
Rio has managed to unify the often fractious party since he defeated a leadership challenge last year and his strategy of moving the PSD to the centre appears to be bearing fruit.
Under Rio the PSD defied the odds and booted the Socialists out of office in a regional election in the Azores islands in 2020 and the Lisbon mayor’s office in September.
He is open to forming a coalition with the conservative CDS and upstart libertarian Liberal Initiative party. But such a coalition would need the support of far-right party Chega, which polls suggest could emerge as the third biggest party in parliament.