Portugal parliament finally passes deficit-cutting budget

28 Nov 17

Portugal’s parliament has approved the 2018 budget that seeks to trim the deficit, six weeks after it was first presented to lawmakers. 

The budget, which passed through parliament on Monday evening, included additional income tax bands, lifting public sector pay and promotions freezes, as well as an increase in pension payments.

It also included higher tax rates on certain foods containing higher levels of salt, such as biscuits and potato crisps.

The finance minister Mario Centeno said last month he estimated the government will get €500m of dividends from the country’s central bank next year.

The budget document of the minority Socialist Party government had the backing of its far-left allies, the Communists and Left Bloc, who together hold 122 seats in the 230-seat house.

But the remaining seats voted against the budget, which set the deficit at 1.1% of gross domestic product in 2018.

The country recorded its lowest deficit in 40 years after halving it in 2016, figures showed earlier this year.

Portugal’s economic growth was projected to 2.2% in 2018, down from 2.8% this year, as exports slow down. The unemployment rate is forecast to drop to 8.6% from 9.2% in 2017, Centeno said.

Earlier in November, IMF warned European governments to “prepare for a rainy day” by making room in their budgets for “manoeuvre” in “worse times”.

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