Portuguese Prime Minister Luis Montenegro's minority government was sworn in on Tuesday.

However, uncertainties loom over its ability to last beyond this year. It confronts the challenge of governing amidst the most fragmented parliament in 50 years of democracy.

The Democratic Alliance (AD) coalition won last month's election by a narrow margin over the outgoing Socialist Party (PS).

Montenegro affirmed the government's commitment to governing until the completion of its four and a half-year mandate. He pledged to lead with "humility, patriotic spirit and capacity for dialogue," while urging the opposition to do the same. 

"The (expected) investiture in parliament (next week) can only mean the opposition will respect the principle of letting us work and execute the government's programme," he stated.

With only 80 seats in the 230-seat legislature, the AD will require the support of either the far-right Chega party, which increased its parliamentary representation fourfold to 50 lawmakers, or the centre-left PS, which obtained 78 seats, in order to pass legislation, Reuters reports.

"The odds are against political stability as the government has one of the smallest relative majorities in democracy and faces fierce opposition from a stronger ultra-right," stated Andre Freire, political scientist at the ISCTE research university.

The PM has pledged tax reductions for families and companies, along with increases in pensions and wages for police, teachers, and doctors. While he may be able to advance some of these measures with opposition backing in parliament, the pivotal legislation—and his first significant challenge—will be the 2025 budget.

Historically, failure to approve a budget has often led to early elections in Portugal. Analysts forecast the AD will be forced to negotiate the spending plan, and potentially other measures, with the PS in order to avoid such a scenario.

"Much will depend on the mastery and skill in negotiations, but I don't know if it will be enough to approve the 2025 budget," Freire added.