Following the Carnation Revolution on 25 April 1974, Portugal entered a period of transition to democracy. During this period, which lasted for about two years, several provisional administrations governed the country, starting with the National Salvation Junta, which was followed by six other provisional governments composed of military and civilian members.

On 25 April 1975, one year after the revolution, elections were carried out in Portugal to elect the 250 members of the Constituent Assembly. The main goal of this Constituent Assembly was to write a new Constitution of Portugal to replace the Estado Novo's Constitution of 1933. This assembly had a one-year mandate with no governing functions, as the country continued to be governed by a military-civilian provisional government during the deliberations of the Constituent Assembly. The Socialist Party (PS), with 38% of the votes, was the party with most representation.

The new Constitution of Portugal, drafted over the course of a year, was finally promulgated on 2 April 1976. Immediately after the promulgation, the Constituent Assembly was disbanded.

On 25 April 1976, the first legislative elections were carried out to elect the members of the Assembly of the Republic (the new official name of the Portuguese Parliament) and the new Constitutional Government of Portugal. 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. As the leader of PS, Mário Soares was sworn as Prime Minister, and became the first democratically-elect Prime Minister of the Third Portuguese Republic.

The government was composed of the Prime Minister, one Minister of State, a Minister without portfolio, and 15 ministries comprising Ministers, Secretaries and Sub-secretaries of State. The government also included the Ministers of the Republic for the Autonomous Regions of Azores and Madeira.^[2]

By the second half of 1977, the situation of the Portuguese economy was deteriorating. 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.^[3][4] However, the policies were quite unpopular and by late 1977 Soares was facing significant opposition in the Parliament.

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.^[6] Consequently, Soares announced the dissolution of the government, which took effect on 23 January 1978.