Finance minister promises ‘strong relaunch of Portuguese economy” with no increase in taxes

Finance minister João Leão presented Portugal’s four-year Stability Programme today, pledging the PS government will not be adopting austerity measures, or increasing taxes, to get through the crisis caused by the pandemic.

Tax increases in ‘determined’ segments were one of the ‘ideas’ for governments to emerge from this crisis, put forwards by the OECD recently.

But Mr Leão insists that Portugal has “conditions to face this crisis in a very different way to that adopted for other crises.

“Before the pandemic we managed to put our public accounts in order. We managed the first budget surplus in our democracy, and this gave us the ability to face this crisis with confidence and with a very strong programme for the recovery of economic activity into the next year”.

In his estimations, Mr Leão sees the economy growing in general terms by “around 9%” over the next two years, powered by public and private investment.

He envisages exports growing by around 7%.

When it comes to unemployment – which has risen markedly since 2020 – he sees it plateauing out by the end of the year at around 7.3%, to reduce over the next few years.

The government’s Stability Programme 2021-2025 will be backed by roughly €22 billion coming from the Brussels’ ‘bazooka’ (Programme of Resilience and Recovery, PRR), meaning that by next year Portugal’s financial situation should be back in the black, “aided by the recovery in exports, tourism and sums from the PRR”, he said.

The long-term forecast is for a ‘year-on-year reduction in public debt’ to the point that the country is once again below 120% (of GDP) by 2024.

For this year, Mr Leão expects public debt to run at 128% (compared to 2020’s abysmal 134%).

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