Portugal's center-right Social Democrats (PSD) won Sunday's general election, booting out Prime Minister Jose Socrates' Socialists after they sought a 78-billion-euro bailout that will bring deep austerity, exit polls showed.
Exit polls by three television stations gave the Social Democrats between 37 and 42.5 percent of the vote, far ahead of the Socialists who scored between 24.4 percent and 30 percent.
"These are clear results which the Socialist Party wants to recognize. All the results point to a win for the PSD and a defeat for the Socialists," Economy Minister Jose Vieira da Silva said shortly after the exit polls were published.
The election ends a period of political uncertainty that started with the collapse of the Socialist government in March and led Lisbon to become the third country in the euro zone to seek a bailout after Greece and Ireland.
The Portuguese, who face the highest level of unemployment in their country for three decades, were expected to reject caretaker Prime Minister Socrates because of the dire state of the economy.
Social Democrat leader Pedro Passos Coelho is now expected to form a government together with the rightist CDS party, which won between 10.1 percent and 14 percent of the vote, according to the exit polls. With the preliminary results, he should be able to form a strong majority in parliament with the CDS.
Passos Coelho, voting at a polling station in Amadora on the outskirts of Lisbon where reporters far outnumbered voters, said Portugal had to stick to the bailout terms to regain market confidence and return to growth.
"You know that we now have a very difficult period for the next two or three years. But I'm sure that we will make the necessary change and Portugal will achieve new prosperity with economic growth," he told reporters.
Many voters said they were disillusioned with politics.
"Seeing the economic and political situation in the country I just don't believe any of the candidates. But not voting will make it even worse," said Jose Evora, a retiree voting on the outskirts of Lisbon.
Ricardo, a voter in his late 20s, expressed a common view, that any new government will have to march to the beat of the lenders' drum.
"I think the election won't bring anything new because it's the IMF in charge of the country now ... Any party that gets to the government will just have to follow IMF rules," he said.
MOST DECISIVE VOTE SINCE 1974
A center-right government would be welcomed by investors, who have lost faith in the country in the past few months, dumping its bonds and sending borrowing rates to euro-era highs.
European Commission President Jose Manuel Barroso, who is Portuguese and voted in Lisbon, said the election was the most important since the turbulent ballots after the overthrow of the country's fascist dictatorship in April 1974.
"Given the economic and financial situation in the country, I consider this election the most important since the first ballots after April 25," he said.
A center-right coalition government should be able quickly to enact reforms and austerity measures included in the bailout, such as sweeping tax rises and deep spending cuts, to reduce Portugal's large deficit and debt.
But the economy is expected to contract two percent both this year and next, presenting the new government with tough challenges as disposable incomes fall and austerity takes its toll.
So far there have been few strikes or protests against the austerity, unlike in Greece and neighbouring Spain, but analysts say that could change as the recession deepens.