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Fitch Ratings said on Wednesday that it could downgrade Portugal's credit rating if the opposition will form new government.
"Fiscal relaxation resulting in a less favourable trajectory in government debt/GDP levels could lead to negative rating action, as could weaker growth that had a negative effect on public finances," the agency said.
Portugal's credit rating is 'BB+'. The outlook is Positive.
Prime Minister Pedro Passos Coelho's minority government lost a confidence vote on Tuesday.
"The defeat of Portugal's minority government highlights the political instability created by October's elections and the resulting risks to fiscal consolidation and reform implementation. The extent of these risks will depend on any new government's cohesiveness, its policy programme, and whether political uncertainty damages economic and financial market confidence," Fitch said.
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