LISBON, Portugal - Portugal will elect a new government on Oct. 4, with voters choosing whether to stick with austerity policies or get more money in their pockets.
President Anibal Cavaco Silva announced the date of the parliamentary elections in a televised address late Wednesday. He said it was "extremely desirable" for the next government to have a clear majority in Parliament, ensuring political stability as debt-heavy Portugal continues its fight to recover from the recent eurozone financial crisis.
But recent opinion polls have indicated that main rivals are neck-and-neck.
The two parties in the centre-right coalition government say Portugal must persevere with spending cuts adopted after the country's 78 billion euros ($85.7 billion) bailout in 2011.
The Social Democratic Party and the Popular Party, the coalition's junior member, are due to unveil their joint electoral program next week. It is widely expected to be a defence of their past four years in power, emphasizing that they have brought Portugal back from near-bankruptcy.
The centre-left Socialist Party, the main opposition, says it would abide by the fiscal rules covering the 19 countries using the euro currency. At the same time, it promises to shift the focus to growth, temporarily easing income tax in a bid to stimulate spending and encouraging corporate investment through fiscal incentives.
Portugal's economy remains feeble, with growth of 0.9 per cent last year. Also, unemployment is at 13 per cent and government debt is almost 130 per cent of gross domestic product, the third-highest in the European Union.
The Socialists are also promising to restore the four public holidays the government scrapped in a bid to improve output, and return sales tax at restaurants to 13 per cent from 23 per cent.
The Socialists are vulnerable on their record, however, with the bailout coming after they were in power for six years.