The Socialist Party won the election with 34.89% of the votes,[1] and got the approval of the President of Portugal António Ramalho Eanes to form a minority government.

The government also included the Ministers of the Republic for the Autonomous Regions of Azores and Madeira.

During the summer of 1977, Prime Minister Mário Soares asked for a loan from the International Monetary Fund (IMF) and several austerity measures were implemented, such as the rise of interest rates, devalue of the escudo and budget cuts.

In November 1977, Soares proposed a sizeable memorandum between parties and associations to seek common economic and social policies, which was rejected.

[5] Because of this rejection, Soares presented a motion of confidence to the Parliament, which he lost by a 59 vote margin.