Sergio Goncalves and Andrei Khalip

LISBON (Reuters), – Prime Minister Antonio Costa declared on Tuesday that he wouldn’t resign if he fails to reach a final-minute agreement, despite the possibility of parliament rejecting the 2022 budget.

Ex-allies from his Socialist minority government, hard-left, have indicated that they would vote no to the bill on Wednesday’s first reading. It has little chance of passing, with only three abstentions within the 230 seat parliament.

Costa stated that it was not the right time to ignore difficulties but rather to face them, and that he would not quit.

On Monday, President Marcelo Rebelo de Sousa said that without a budget which heavily relies on EU pandemic recovery funding, he would have to disband parliament and hold a quick election two years earlier than planned.

Portugal’s crisis could bring an end to six years of stability that the Socialists enjoyed under their leadership. It has one of Europe’s largest public debt loads and is currently suffering from painful austerity.

Costa’s government achieved a modest surplus in the budget before the COVID-19 pandemic. The solid economic growth had earned it praises from the EU.

Costa stated, “Let’s respect the Portuguese people who don’t want to be in crisis.” Costa said, “We will do anything to reach a settlement, but at no cost,” explaining that Portugal must maintain its hard-earned international reputation.

Left Bloc and Communists say that the government’s focus is on the deficit too much. They want more worker protections, better social security systems and greater public investments in the health system.

A new election must be called within the next 55 days after the president has dismantled parliament. Rebelo de Sousa indicated that the election could take place in January or February. Costa will then remain in charge of the caretaker government up until after election.

The government may rollover this year’s growth-oriented budget plan. This included billions to help families and businesses through the pandemic.

Analysts think an election will not resolve the problem of governability.

Surveys indicate that support for Socialists remains at roughly the same level than in the election of 2019, which saw them take 36%. Left Bloc and the Communists are both in single figures and expected to lose even more seats.

Social Democrats, the main opposition party, poll at around 27% and prepare for December’s internal leader vote.