Portugal’s centre-right government which includes three parties (Social Democratic Party, People's Party and Earth Party) who are supporting the austerity program for the country have won the general election but lost the majority in the national assembly on Sunday.
Portugal’s Prime Minister, Pedro Passos Coelho became the second re-elected leader after Greece’s Alexis Tsipras to win a general election while supporting austerity measures.
A minority government, has never survived since 1974 fascist Antonio Salazar's regime, also a minority government could worry investors in the Iberian country, which has a population of 10 million.
99 percent of the polls have been counted, but official results will be announced on late Monday, the governing coalition has around 38.5 percent of the vote.
The runner up party after the coalition is led by the Socialist challenger Antonio Costa who has 32.4 percent of the vote.
Passos Coelho said he was ready to form a new government and also suggested he may to have to compromise on policies.
"We interpret the results with a lot of humility," he said. "We failed to reach a majority in parliament."
According to current calculations the government gained 100 seats in the 230-seat parliament which is 16 short for a majority.
Antonia Costa’s Socialist Party who had promised to ease austerity measures and deliver more disposable income back to families admitted defeat to the governing centre-right political party.
"Nobody can count on the Socialists to support policies that go against the Socialists," said Costa adding "There was a large majority of Portuguese who voted for change."
He responded to the critics over whether he will resign by saying "The Socialist Party did not achieve its stated objectives, and I take full political and personal responsibility," Costa told supporters in the capital.
"I will not be resigning," he added.
Portugal’s Left Bloc increased their share of votes to about ten percent while traditional Communists gained 8.2 percent.
Portuguese politics will be heated in the coming weeks which is going to be presented 2016’s budget by government.
Left-wing parties will push hard the government because of the austerity policy and raised taxes while cutting public spending.
Vice President of Teneo Intelligence Antonio Barroso in London said political instability was set to rise, Reuters reports.
"The good result of the extreme-left Left Bloc will force the Socialists to harden their stance towards the government, which does not bode well for political stability over the medium term," Barroso said in a research note.
The 2015 general elections was the first election after Portugal’s international bailout last year.
Prime Minister Alexis Tsipras's left coalition won the elections in the last period of September in Greece, despite the fact it was under EU’s (European Union) intense pressure of paying debts.
On the other hand Portugal’s neighbour Spain also is struggling with austerity measures. Spain, Prime Minister Mariano Rajoy's People's Party leads polls before a December 20 election.