By Sergio Goncalves, Catarina Demony and Andrei Khalip
LISBON (Reuters) -Portugal's president named Luis Montenegro, head of the centre-right Democratic Alliance (AD), as the country's new prime minister on Thursday and invited him to form a minority government after eight years of Socialist rule.
The AD won a parliamentary election on March 10 by a slim margin, far short of a working majority. Montenegro, 51, has repeatedly said his party is prepared to govern on its own and will not negotiate a broad formal agreement with the far-right party Chega to work together.
Chega emerged as a political force after quadrupling its parliamentary representation - a first for a far-right party since the fall of a fascist dictatorship 50 years ago.
An AD government will be dependent on piecemeal deals in parliament with Chega or the left wing to pass legislation, making it potentially unstable.
The widely expected nomination by conservative President Marcelo Rebelo de Sousa came shortly after midnight on Thursday after the remaining ballots from abroad were counted by the electoral commission, giving Chega two additional seats, while the AD and the Socialists added just one each.
Overall, the AD won 80 seats in the 230-seat legislature, which is expected to return next week, followed by the Socialists at 78 seats and Chega, which was founded just five years ago, with 50.
"The AD won the election...(so) the president...decided to nominate Luis Montenegro as prime minister," the president's office said in a statement.
The result underscores a political tilt to right-wing populism and a dwindling of Socialist governance across Europe, which is expected to result in gains for far-right parties in European elections in June.
After being named premier, Montenegro told reporters the government would be sworn in on April 2. Within 10 days of that date must present its programme to parliament, which is automatically approved unless parliament holds a vote to reject it.
Montenegro added that he would present his cabinet of ministers to Rebelo de Sousa next Thursday.
Analysts expect an AD government will be allowed to take over, and they see the 2025 budget as its first test of survival toward the end of this year. A rejected budget could lead to a new election.
Chega leader and former TV sports commentator Andre Ventura has threatened to vote against the bill and said the AD would be responsible for any political instability if it continues to ignore his party. But he also signalled support for at least some initial steps proposed by Montenegro.
Such initiatives include higher wages and benefits for healthcare workers, police and teachers, and lower income taxes.
Socialist leader Pedro Nuno Santos said on Tuesday it was "practically impossible" for his party to support AD's 2025 budget, but it was open to negotiating measures to help the flagging healthcare, education and security sectors.