Portugal's Socialists propose budget talks with minority government

By Sergio Goncalves

LISBON (Reuters) - Portugal's main opposition Socialists have proposed starting negotiations in "good faith" with the centre-right minority government on next year's budget bill, aiming to avoid further political instability, a party spokesman said.

In the last three months, the new government suffered several setbacks as the Socialists teamed up with far-right Chega to block some of its fiscal proposals, raising doubts about the approval of the budget, which would be the administration's first major survival test.

Prime Minister Luís Montenegro has said that this 'negative coalition' of political forces from the opposite ends of the spectrum aims to paralyse government activity and force another election in a country that has had two early elections in the past two years.

However, in an unexpected twist, Socialist Party (PS) spokesman Marcos Perestrelo said that in a meeting on Monday, the party's Political Committee asked the general secretary, Pedro Nuno Santos, to negotiate with the government.

"The PS is available to establish a constructive dialogue regarding the budget, with the aim of creating conditions of stability because the country needs it," Perestrelo said.

He said "there is a firm and true desire on the PS side to build a good budget", adding that the government must also show "flexibility and the will to negotiate the conditions" acceptable to the Socialists.

He said the PS and government converge on the need to "keep the budget balanced, with debt reduction" and policies to support families.

"Ideally, negotiations should begin as soon as possible," he said.

(Reporting by Sergio Goncalves; edititng by Andrei Khalip, Alexandra Hudson)