Portugal will hold a snap parliamentary election on March 10, its second in as many years, following the abrupt resignation of the Socialist prime minister amid a corruption investigation.
Yet, President Marcelo Rebelo de Sousa said he would only disband parliament, where the Socialist Party (PS) has a majority of seats, after the final vote on the 2024 budget bill, due on November 29.
The house approved the bill on first reading on October 31.
Speaking after meeting his consultative body, the Council of State, on Thursday, and talking to the main political parties a day earlier, Rebelo de Sousa said allowing MPs to pass the budget would "allow to meet the expectations of many Portuguese" and deploy EU recovery funds in projects.
He said the election was needed to provide "clarity and direction to overcome an unexpected void that surprised and disturbed the Portuguese".
The budget includes lower income tax rates for the middle class, social benefits focused on the poorest and a 24 per cent jump in public investment to spur slowing economic growth.
By law, an election needs to be held within 60 days of the publishing of the presidential decree dissolving parliament.
Antonio Costa stepped down as prime minister on Tuesday after prosecutors detained his chief of staff in an investigation into alleged illegalities in his government's handling of lithium and hydrogen projects.
Prosecutors said Costa was also the target of a related probe. He has denied wrongdoing.
Some of those detained in the investigation appeared before a Lisbon court on Thursday.
They were suspected of crimes of corruption and influence-peddling, prosecutors said.
Since coming to power in 2015 in the aftermath of a debt crisis and international bailout,
Costa has presided over a period of strong economic growth during which his successive governments quashed the budget deficit and reduced the debt burden, winning praise in Europe for sound fiscal policies.
By calling the March election, Rebelo de Sousa also addressed the need of the PS to pick a new leader to run.
Earlier, PS president Carlos Cesar said March would be the best timing, while other parties pointed to January or February.