FACTBOX-Key political risks to watch in Portugal

LISBON Dec 1 (Reuters) - Portugal's minority government is facing growing investor pressure to request an international bailout to ease its debt crisis. Prime Minister Jose Socrates is resisting such a move and hopes an austerity drive will pull the country out of trouble.

The Socialist government, with the acquiescence of the main opposition Social Democrats (PSD), pushed through the 2011 budget bill. It combines steep spending cuts and tax increases to soothe investor fears about the country's ability to rein in its budget deficit.

That agreement has won some time for the government but the respite could be short-lived.

The austerity measures aim to guarantee that Portugal cuts the budget deficit to 4.6 percent of gross domestic product next year from this year's projected 7.3 percent.

Below are some political risk factors to watch:

OPPOSITION PUSHES FOR SNAP ELECTIONS

The PSD is ahead in opinion polls and could push for snap elections from May next year, the earliest possible date under electoral rules after January's presidential election.

Recent opinion polls showed the PSD rising to around 40 percent of voting intentions -- close to winning a majority in parliament -- as the Socialists slumped to around 25 percent.

Analysts say that if the PSD can keep their lead after the austere budget kicks in, it will use any opportunity to call a no-confidence motion against the government some time in the second quarter of 2011.

The government's normal term finishes at the end of 2013.

What to watch:

-- Evolution of voting intentions in opinion polls as austerity measures kick in. Will the PSD be punished for its decision to allow the budget to pass?

PSD leader Pedro Passos Coelho appears to be biding his time to see if a bailout becomes necessary, knowing the government's popularity will fall further when it does.

DEFICIT CUT TEST AND GROWTH

The approved budget relieves only some of pressure on the Socrates government's belt-tightening performance, with markets expected to continue focusing on its capacity to implement the austerity measures, especially those on spending cuts.

The PSD has also said it would monitor the budget's execution for any signs of failure to implement the cuts, which means it could serve as a pretext for a no-confidence vote.

While the focus now is on the 2011 budget deficit, the government has yet to prove it will meet this year's target of 7.3 percent of GDP, down from 9.3 percent last year.

It has already said it will use pension fund assets to help close the gap, a move that has been criticised by the opposition and analysts as an accounting trick.

Another risk is that austerity could throw the country into a new recession in 2011 after this year's projected growth of 1.3 percent. Last year, the economy shrank 2.6 percent.

The government has cut its growth forecast for 2011 to 0.2 percent from 0.5 percent, but says it is a prudent estimate that could be surpassed.

Although Portugal's public debt -- expected to end 2010 at about 82 percent of GDP -- is considerably lower than Greece's, economists worry that it could rise fast if there is an extended recession.

Finance Minister Fernando Teixeira dos Santos has promised the debt ratio will start to drop in 2012, but some economists warn it could reach close to 100 percent of GDP in that year.

What to watch:

-- Monthly and full-year budget statistics. The 10-month core state sector deficit still rose 1.8 percent.

-- Signs of slowdown in the economy, including a contraction in credit, which could make budget goals harder to meet. Evolution of exports as main source of projected meagre growth.

TALKS WITH UNIONS ON AUSTERITY MEASURES

Unions have reacted furiously to the austerity measures. On Nov. 24, the 500,000-strong UGT and the 750,000-strong CGTP unions staged what they said was Portugal's largest general strike, with 3 million workers taking part.

But since then union leaders have said they would hold a dialogue with the government on its austerity actions rather than taking to the streets.

The UGT is most concerned about the prospects of changes to the labour code that could make firing workers easier and this is something it wants to avoid via negotiations, UGT Deputy General Secretary Pedro Roque said.

CGTP Manuel Carvalho da Silva has also said his union was also ready to negotiate to reach a compromise although he said the government must change its course.

The government has said it will start a dialogue with the unions and companies to reform the labour market in order to increase competitiveness.

What to watch:

-- Rising social discontent among private sector workers.

For political risks to watch in other countries, please click on [ID:nEMEARISK] (Reporting by Andrei Khalip and Angus MacSwan; editing by David Stamp)