Months late and unlikely to satisfy (m)any
Months late, and unlikely to satisfy (m)any, the PS government’s State Budget (OE2022) will be presented to parliament this afternoon.
With inflation already running at 5.3%, and forecasts for it to go higher, the document is understood to have been formulated on the basis of a 4% rate of inflation by the end of the year.
According to the Bank of Portugal’s latest (and sources stress ‘conservative’) estimates, this is at least two percentage points short.
The result will mean “shrinking pension and salaries” and a generalised loss of purchasing power for all citizens.
State workers, for instance, have seen a 0.9% increase in salaries this year, meaning these have essentially ‘devalued’ by at least 3%. The same goes for pensions.
Even with the extraordinary measures announced on Monday, today’s presentation of the government’s plans is likely to generate heated debate from all sides of the House.
Leader writer Paulo João Santos stresses the OE2022 is really very similar to the document drawn up by former finance minister João Leão that was vetoed last October, plunging the country into early elections from which PS Socialists emerged with an absolute majority. The only difference now is that no matter what the objections from minority parties, it will be approved thanks to strength in (PS) numbers.
“The world has changed (since last October) but the budget is the same”, he considers. “It doesn’t reflect the increase in inflation coming from the energy crisis” – and even with the targeted measures to help the most deprived in society – “there are no miracles”.
“The government says the situation is temporary”, adds Santos. “But looking at the radar of the war it is difficult to see where the signs of hope are coming from. It would be advisable therefore for the OE2022 for the rest of the year to have followed the logic, repeated over various occasions by the prime minister: “We should hope for the best, but prepare for the worst”.
President Marcelo has also suggested he is doubtful that inflation will be as temporary/ passing as the government seems to think it will be.
This is the first State Budget to be introduced by the new minister for finance, Fernando Medina – former mayor of Lisbon who was historically ousted from his position in the municipal elections last September.
Many see his appointment as “one of the jobs for the boys” for which particularly Socialist governments have become legendary.
New IRS tax brackets expected to bring “bonus” to 1.5 million citizens
This is one area where today’s budget may bring some ‘relief’. The ‘seven’ scales of taxation currently in place will be extended to nine, bringing down income tax payments for workers on the lowest incomes.