Portugal's President Marcelo Rebelo de Sousa has called a snap election for March 10, a day after Socialist Prime Minister Antonio Costa stepped down over a corruption scandal.

"I have chosen to dissolve the Assembly of the Republic and hold elections on March 10," Rebelo de Sousa, said in a televised address on Thursday.

Costa will stay on as a caretaker prime minister until the vote is held, which the president said would provide "clarity and direction to overcome an unexpected void that surprised and disturbed the Portuguese."

Rebelo de Sousa also said he would only dissolve parliament after a November 29 vote on next year's budget in order to "meet the expectations of many Portuguese" and deploy EU recovery funds in projects.

What is the corruption scandal about?

Costa has been Portugal's prime minister since 2015, and his Socialist Party commanded a strong majority in parliament.

However, Costa stepped down abruptly on Tuesday after police raided a number of properties, including his official residence, as part of a corruption investigation.

The investigation relates to influence peddling and the misuse of funds in awarding contracts for lithium mining and a green hydrogen plant.

Police arrested Costa's chief of staff and four other people.

Costa said his conscience was clear, but the allegations were too serious to continue holding office.

"The duties of prime minister are not compatible with any suspicion of my integrity," he said on Tuesday.

After the president's announcement on Thursday, Costa expressed disappointment over the snap elections and said the president could have instead accepted his party's proposal to name Bank of Portugal governor and former Socialist finance minister Mario Centeno as the new prime minister.

"The president understood that it was better to hold an election than having a stable, renewed government under the leadership of Mario Centeno," Costa said.

"The country did not deserve to go to the polls."

zc/lo (Reuters, AFP, AP, dpa)

This article originally stated that Prime Minister Antonio Costa's home was raided. This is incorrect. Police raided his official residence. We corrected the article accordingly on November 13, 2023.