Portugal's finance minister João Leão

Budget passes, with only Socialists voting in favour

The marathon of debate, proposals, counter-proposals and wrangling is over… or is it?

The State Budget for 2021 passed by a whisker last Thursday, with only PS Socialists voting in favour.

Bargain-forging with PCP communists, PAN, PEV (the Greens) and one non-ascribed MP saw enough abstentions to trounce the votes against delivered by Bloco de Esquerda, PSD, CDS, Chega and Iniciativa Liberal.

But all by no means is ‘well’. Indeed there are some sources who seem convinced that President Marcelo will send the whole thing back because changes ‘at the last minute’ saw at least one proposal approved that violates a State ‘contract’.

We’re talking of the Bloco de Esquerda bid to put a block on new cash transfers to Novo Banco.

‘Out of the blue’, the left-wing party’s “irresponsibility” (in the eyes of PS Socialists) won favour with the centre-right and various other minority parties – meaning the minority government was suddenly outnumbered, and left having to explain to Brussels that ‘no matter what had been voted upon, Portugal would without doubt honour its commitments’.

As media commentators have agreed, this assurance may well not be enough. The whole budget may have to ‘go back to parliament’, and be ‘revoted on’ with the offending decision removed.

But there was more: MPs voted also to reduce tolls on formerly untolled SCUT highways (roads that were never designed to have tolls in the first place). This too will leave the government ‘short on revenue’ and highly unpopular with highway concession companies.

Highlighting both these ‘defeats’ at the 11th hour in parliament, finance minister João Leão: “We will do everything to ensure no-one gets burnt in this process…” That ‘everything’ may involve President Marcelo ‘holding on his rubber stamp of approval’ until matters are reversed.

Says SOL website, there is another possible solution: the government could send the budget to the Constitutional Court – which will be able to decide on the basis of the law (not emotions).

But then there are the glaring ‘realities at play’; the reasons why the government’s spending plan was hijacked: the State contract with American equity company Lone Star (which ‘bought’ Novo Banco back in 2017) was ‘ruinous’.

Economist Eugénio Rosa told SOL, it was a contract designed to “generate enormous benefits for one of the parties involved, Lone Star, damaging the other, which is the State and Portuguese taxpayers: in other words, a shameful, ruinous contract for the State and the country”.

As such, it could be seen as the perfect excuse for ‘irresponsible parties’  to power forwards the political ‘crisis’ that PM Costa and President Marcelo have been doing their utmost to head off for the best part of the last year. Except, of course, it isn’t: Portugal seriously doesn’t need any further crisis.

Thus, economists are agreed: somehow matters will limp on.

Said one: “Everyone comes out of this badly: the government, because this isn’t a budget of their own making; the abstentionists because this is a ‘bowl of lentils’ designed to satisfy captive targets, and the other parties because they’ve contributed to more negative alliances during a time of immense crisis.

“The budget in the end is a ‘child of no-one’ that will simply aggravate the deficit and increase expenses”.

[email protected]