Political analysts have spent much of the past seven weeks since the 4 October general elections second-guessing Cavaco Silva over which route he will decide to take.
But a series of comments by the president, such as “Portugal needs stability” followed by a “caretaker government does not pose serious concerns”, have left observers baffled.
The President started the week by comparing the political crisis of 2011 with the current one, saying the current predicament is “much more favourable than the one which existed in 2011.”
He argued that he himself had been in charge of a caretaker government back in 1995, recalling that another one was asked to govern in 2004 when the then-Prime Minister Durão Barroso swapped Lisbon for Brussels.
He said neither of these temporary cabinets had caused any notable political or financial instability.
Parties to the left were quick to react, with António Costa, the Left Bloc’s Catarina Martins and Communist leader Jerónimo Martins lambasting the president’s arguments, all reminding him that these particular situations arose just before elections rather than within weeks of the electorate being asked to cast their votes.
Cavaco Silva further highlighted the fact that there was “a substantial financial cushion” which would be able to see through an interim government until the next ballot, which would take place no earlier than next June.
Furthermore, this view would have been further substantiated by Wednesday’s successful bond sale by the treasury, which saw Portugal record its most successful venture yet on the international markets.
Having hoped to sell between €1 billion and €1.25 billion worth of government debt, investors queued up to purchase over €1.5 billion worth of treasury bonds, recording negative yields for six and 12 month bills – the first time Portugal has achieved this ‘German-like’ sale to confident investors.
But with markets seemingly unperturbed by the current political instability and the possibility of the extreme left exerting substantial influence on the government, the president could still be inclined to call on António Costa to form a government, with the markets having allayed his vocal fears over leftist rule and their opposition to austerity.
A clue pointing in this direction is the fact that following conversations with bankers on Wednesday, BPI chairman Fernando Ulrich emerged saying he supported a leftist government for the sake of financial stability.
Following this meeting with bankers, Cavaco Silva on Thursday called in seven leading economists to provide him with counsel.
Among the seven, were four former Socialist finance ministers, leading to justifiable speculation that the president was seeking assurances from them that a leftist government would not deplete state coffers to a degree that could see the country return to the 2011 scenario when the Socialists were forced to seek a bailout.
He would also have wanted guarantees that such a government would uphold international commitments.
The meetings were rounded off with Cavaco Silva meeting with Prime Minister Pedro Passos Coelho.
While it was not on his official agenda at the time of going to press, sources at Belém Palace revealed on Thursday that all party leaders with parliamentary representation had been summoned to meet the President this Friday.
This is traditionally the final, and compulsory, act by a president before announcing a crucial decision of national interest.
While there is no deadline for such a decision, Cavaco Silva would be expected to make one before campaigning for January’s presidential elections commence, allowing his potential successors to reveal their intended course of action in the wake of his verdict.
A decision might be made this weekend, but it is unlikely to be revealed publicly before at least Sunday evening in an address to the nation during the 8pm television news bulletins