Economist Pedro Brinca refutes notion that State Budget is a good one

Economist warns of ‘real loss of spending power’ 

Portugal’s OE2022 laid bare

Economist Pedro Brinca has taken the party-political backbiting out of the government’s proposed State Budget and laid things out in layman’s terms.

The document which is being debated today – and over which all minority parties are critical – represents a “real loss of spending power” for everyday Portuguese citizens,  particularly public sector workers who have been struggling on low salaries for years, and now see increases that are far below the rate of inflation.

The fact that the budget will pass nonetheless is what is causing so much frustration.

In parliament, the criticism runs across the board: from left to right there is no party that is happy.

Stresses Brinca, relief offered in ‘many of the measures’ brought in because of the war or to combat inflation simply doesn’t cut the mustard. He highlights the social tariff for electricity (available to the roughly 700,000 of the least well off families), and the offer of a €60 lump sum which, he says, “is a long way from the roughly €400 that these families are going to ‘lose’ because of the rising cost of living.

SIC television news has put the budget into 13 ‘essential points’, stressing the government is fully aware of the “elevated degree of uncertainty” due to the war in Ukraine, and collateral damages. The points are:

  1. Changes in the taxation system aimed at providing some relief for the young and for middle-class families
  2. A €10 across the board increase for pensions under €1,108
  3. Support for low-income families and refugees (this is where the €60 payment comes in)
  4. Phased programme towards free crèches
  5. €700 million reinforcement of the SNS health service
  6. Beefing up of education through hiring of more teachers
  7. Reforms for justice system
  8. Increased public investment (up 30% on investment in 2021)
  9. Increasing State coffers by €495 million from dividends from the Bank of Portugal and State bank CGD
  10. Support to businesses of €2.6 billion
  11. Investments in transport sector
  12. Investment in TAP (an extra €990 million)
  13. Investment in State media agency of €16.5 million.

Opening the budgetary debate this afternoon, PM António Costa said that as far as the government is concerned, the document “maintains the priorities presented at the end of 2021” (when the draft State Budget was vetoed, and snap elections were called).

“We have maintained the same strategic objectives and the same ambition to accelerate growth and convergence and reinforce social cohesion”.

Regarding the budget’s response to inflation, the PM said the government has acted “rapidly and identified solutions in the face of this crisis with robust and effective economic measures”.

The general debate will end with a vote at the end of Friday afternoon, with the final global vote coming on May 27. The intervening weeks will allow for parties to suggest changes/ improvements.

As the debate went forwards, workers of CP (Comboios de Portugal) scheduled a strike for increased salaries, threatening rail ‘chaos’ for May 16.

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