January 28, 2021

Portuguese Government delivers Budget that foresees lower deficit of democracy

Portuguese Government delivers Budget that foresees lower deficit of democracy



The Portuguese Socialist Government delivered today in Parliament the last Budget of the State of the legislature close to midnight, whose content will be presented on Tuesday but, as it was advanced, it foresees that 2019 will end up with the lowest deficit of the Portuguese democracy, the 0.2% of GDP.

The document was delivered to the Assembly of the Republic, touching the deadline set by the law by Finance Minister Mário Centeno, who postponed the in-depth presentation to Tuesday.

In brief statements to journalists after the delivery, Centeno confirmed that the draft estimates that Portugal closes 2019 with a public deficit of 0.2% of GDP.

"It is a Budget that follows the path of rigor and balance in public accounts," said Centeno, who denied that there had been last-minute negotiations with his partners on the left that caused delays in the delivery of the document.

Centeno stressed that the 2019 accounts include important measures in areas such as transport, housing, culture and science and allow the "continuation of convergence with the euro zone and the European Union", in addition to fulfilling international commitments.

Before its delivery, some details of the document were unveiled, which updates the economic forecasts for 2019 and forecasts an economic growth of 2.2%; an unemployment rate of 6.3% and a public debt of 117% of GDP.

The measures that are known point to a Budget focused on the benefits to families and workers but in which there is a shortage of support for companies, which comes a year after the legislative elections.

At the fiscal level, the extra hours will be quoted autonomously to the base salary, which will prevent the withholding from increasing, and the deadline for submitting the declaration will be extended by one month.

The draft establishes a 50% discount on the income tax of individual people (IRS) until 2023 for immigrants returning to Portugal and tax benefits for students and families who move to the interior of Portugal, the most disadvantaged area of ​​the country .

The rate on plastic bags will increase, the additional tax on fuels will be maintained, the tax on sugary drinks will be toughened and theater and concert VAT will be reduced from 13% to 6%.

The Executive and its left-wing partners agreed to an extraordinary increase in pensions to ensure that all increase at least 10 euros and reduces cuts in early retirement for those who are at least 63 years of age and 40 of contribution.

Wage increases are also expected for officials, whose details are unknown.

Textbooks will become free in all compulsory education, up to 18 years, university fees will be reduced and cheaper social transport tickets will be created.

Families will benefit from a 5% decrease in the electricity bill in 2019 and 2020.

For companies, the obligation to advance part of the IRC payment – the tax levied on companies' income – is suppressed, and the special rate paid by the energy sector will also be applied to renewables.

The delivery of the draft came on the day that the new ministers of Economy, Health, Defense and Culture took office, who will have to defend before the Parliament a Budget that they have not elaborated, which does not seem to worry the prime minister, António Costa.

"Budget proposals are not from the ministers, they are from the government," he said in statements to the press after the inauguration ceremony, in which he reiterated that the changes bring "good conditions to execute the budgets."

The socialist government does not have a majority in the House and needs the support of Marxists and Communists, with whom it approved the other three budgets of this legislature.

The document is scheduled to begin its parliamentary proceedings on October 29 and will be put to the final vote on November 29.

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