Portugal set for early elections

Mr Guterres resigned after poor local election results

Portuguese President Jorge Sampaio has dissolved parliament and called a general election for 17 March, following the resignation last week of the country's prime minister.

We have a new political situation we can't ignore

President Jorge Sampaio

Mr Sampaio said he had decided to call early elections because he believed no group in parliament was capable of forming a new government.

Prime Minister Antonio Guterres quit after his governing Socialist party was defeated in Portugal's three biggest cities in local elections on 16 December, sparking a political crisis.

General elections had not been due to be held until October, 2003.

In a televised speech, Mr Sampaio said: "Using the constitutional powers invested in me, I have decided to dissolve the Assembly of the Republic.

"Having considered all the circumstances, I call for elections for a new Assembly on 17 March."

He said his move was designed to maintain national stability.

"We have a new political situation we can't ignore."

Losing support

The centre-left Socialists have ruled for six years but have recently been blighted by economic troubles and allegations of corruption and mismanagement of public funds.

Opposition leader José Manuel Durao Barroso wants change

Portugal has seen inflation rise to 4.3% from 2.9% last year, while public sector wages have been held back.

The Socialists also recently had to make embarrassing climb-downs over several high-profile issues, including an unpopular law on drink-driving.

Within minutes of the president's speech, opposition Social Democrat leader José Manuel Durao Barroso said he hoped 2002 would be the year in which the Portuguese voted for change.

Analysts expect the Social Democrats, which won seats from the Socialists in the local elections, to make significant gains in the national polls.

The existing parliament will keep working until mid-January and the official campaign will start only on 3 March.