Portuguese President Anibal Cavaco Silva is meeting with political parties to decide who to nominate as prime minister and whether it should be the Socialist leader Antonio Costa as head of a coalition with far-left parties.
Although the winner of the Oct. 4, election in Portugal was the center-right Social Democrat Pedro Passos Coelho, he lost his majority in parliament.
As the Social Democrats could only command a minority government and would probably fall as soon as the opposition tabled a vote of no confidence, President Silva will have to ask the left to form a government within weeks.
Portugal, a European Union country, is already running one of the highest budget deficits in the eurozone, which causes uncertainty and arises fears as instability could harm Portugal's economic renewal.
The two left-wing parties campaigned strongly against the president’s outgoing government record of harsh austerity as a solution to provide a budget draft to the EU, that warned members to take action against Portugal because it missed the deadline to present its 2016 budget draft.
Portugal's Communist Party is seen as having an anti-Euro and anti-NATO stance, although moderating its eurozone policies recently while the Left Bloc is regarded as allied to the anti-austerity Syriza Party, that has been discussing the terms of Greece's eurozone bailout for months.
If the socialists are chosen to lead a left-wing coalition, in the history of Portugal, it would be the first time after the fall dictatorship in 1974 that a right-wing president appoints a government supported by communists.