Militants of Socialist party hold flags during a campaign street rally ahead of Portugal s general elections, in Lisbon, on January 28, 2022. (Photo by AFP)
A late surge by the opposition centre-right PSD party has clawed away the ruling Socialists' once comfortable poll lead, with the two sides in a statistical tie according to final surveys.
With one in ten voters still undecided according to recent polls, analysts said the outcome of the election in the nation of around 10 million people is wide open.
Ballot stations open at 8 am (0800 GMT) and close at 8 pm, with exit poll results expected a few hours later.
The prospect of another weak minority government comes as Portugal is trying to boost its tourism-dependent economy which has been badly hit by the coronavirus pandemic.
A stable government is needed for Portugal to make the most of a 16.6-billion-euro ($18.7 billion) package of EU recovery funds it is due to receive by 2026.
"Portugal needs stability after these two difficult years of fighting against the pandemic," Costa, in office since 2015, told a final rally in second-city Porto on Friday.
During the campaign Costa received messages of support from Spain's Socialist Prime Minister Pedro Sanchez and German Chancellor Olaf Scholz, who called the Portuguese premier a "tireless defender of social justice".
Sunday's snap polls were called after two far-left parties that had propped up Costa's minority government sided with right-wing parties to reject his 2022 draft budget in October.
- PSD gains -
If the Socialists again garner the most votes but lack a majority, Costa has said he plans to govern alone by negotiating support from other parties for laws on a case-by-case basis.
Such a government would have "little chance" of lasting until the end of its term in 2026, said Lisbon University politics professor Antonio Costa Pinto.
Under Costa's watch Portugal has rolled back austerity measures, maintained fiscal discipline and slashed unemployment to pre-pandemic levels.
But the PSD's Rio says the economy should expand faster. It proposes corporate tax cuts to spur growth.
Rio has managed to unify the often fractious party since he defeated a leadership challenge last year and his strategy of moving the PSD to the centre appears to be bearing fruit.
Under Rio the PSD defied the odds and booted the Socialists out of office in a regional election in the Azores islands in 2020 and the Lisbon mayor's office in September.
He is open to forming a coalition with the conservative CDS and upstart libertarian Liberal Initiative party.
But such a coalition would need the support of far-right party Chega, which polls suggest could emerge as the third biggest party in parliament.
- Far-right 'hostage' -
Chega, which translates as "Enough", entered parliament for the first time with a single seat during the last election in 2019.
Costa has warned that a PSD-led government would be "hostage" to Chega, whose proposals include tougher Covid-19 confinement rules for Roma people and castrating sex offenders.
Rio accuses Costa of fear-mongering.
He has vowed not to include Chega in government but has indicated he is willing to head a minority government propped up by support in parliament from the far right.
To try to avoid large gatherings on election day because of the pandemic, voters were given the possibility to coast their ballots in advance on January 23.
Costa was among the roughly 285,000 people who voted that day.
And voters who are quarantining because of the virus will be allowed to leave home to cast their ballot, with the government recommending that they vote in the slower final hour.