Portugal mobilises €2.4 billion to support families through inflation

Portugal mobilises €2.4 billion to support families through inflation

Press conference at 9.30am tomorrow to detail all measures outlined by PM

Portugal’s prime minister António Costa finally faced the country this evening to present the long-awaited package to help families through the current inflationary crisis.

Suspense had been almost theatrically built throughout the day – and when the big moment finally arrived, the country was told all measures announced would be further explained at a press conference tomorrow morning, involving four ministers (finance, environment and climate action, infrastructures and housing and labour).

Further measures – specifically aimed at energy prices – will be announced on Thursday; and the equally long-awaited support for struggling businesses will come on Friday.

Thus today’s announcement was the beginning of a number to come through the week.

So what do we know so far?

  • There is to be an extraordinary payment of €125 to every non-pensioner earning up to €2,700 per month, plus a €50 payout to every dependent child. In other words, a couple with two children should receive in October an extraordinary payment of €350.
  • IVA on electricity is to be reduced from 13% to 6% (albeit this has to go through parliament in order to be approved) The idea is that this measure could come into effect (if approved with the desired urgency)  by October 1.
  • Pensioners to receive equivalent of half pension in October (one-off payment), with increases for 2023, depending on amounts received (increases of 4.43% for lowest pensions, up to €886 per month; 4.07% for pensions between €886-€2,659, and 3.53% for higher pensions).
  • Families are promised a 10% reduction on gas bills if they ‘migrate’ to the regulated market.
  • Any rent increases this year cannot exceed 2%, while landlords will be ‘compensated’ through their IRS/ IRC tax returns.
  • Transport costs for 2023 are to be ‘frozen’ (no increases).
  • Fuel costs will receive further reductions, lopping the equivalent of €16 off every €50 spent on diesel, and €14 in respect of petrol.

There was a great of ‘talking’ from the PM, but those are the basic measures – and opposition parties are already complaining they “are not enough”; they are ‘an illusion’ and they “come far too late”.

The PM reiterated the country’s need to ‘balance its books’ and reduce the massive deficit, but this evening’s announcement does not seem to have satisfied any of the other political parties in parliament.

This may well be why the pre-publicity today focused on the ‘phased nature’ of announcements to come through the rest of the week.

Certainly what is true – and explained starkly by the leader of right-wing CHEGA André Ventura – is that the money being offered to citizens is only a drop in the ocean to the billions of euros made by the government as a result of inflation: €12 billion, for example, in IRS; €11 billion in IVA, he explained.

Ventura described the significance of the package as being  ‘a crumb’ in terms of the money taken from citizens by the government over the last few months.

It is hardly surprising therefore that the prime minister has left his ministers in charge of explaining the ‘small print’ tomorrow.

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