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Tuesday, October 13, 2020

Portugal's draft 2021 budget raises investment, subsidies, in bid to return to growth

Portugal’s Prime Minister Antonio Costa says the budget has very clear priorities: fighting the pandemic, protecting people and supporting the economy and employment. — Reuters pic
Portugal’s Prime Minister Antonio Costa says the budget has very clear priorities: fighting the pandemic, protecting people and supporting the economy and employment. — Reuters pic

LISBON, Oct 13 ― Portugal's Socialist government unveiled its draft 2021 budget yesterday, offering more subsidies to the poorest hit by the coronavirus pandemic and betting on public investment to relaunch growth.

“This budget has very clear priorities: fighting the pandemic, protecting people and supporting the economy and employment,” Prime Minister Antonio Costa said in a video released on Twitter, adding the measures would put €550 million (RM2.69 billion) in Portuguese families' pockets.

The government will increase unemployment subsidies and launch a social benefit for the poorest workers affected by the pandemic, ensuring that none have a monthly income below the poverty line of around €501 a month.

Doctors and nurses from the national health service who treat Covid-19 patients will receive a new risk subsidy of up to €219 per month. The government wants to hire 4,200 more health professionals.

Public investment is projected to increase 23.2 per cent in 2021 to more than €6 billion.

Costa's minority government hopes to use the promised added social benefits to sway the parties with which it has been negotiating ― the Left Bloc, the Communists and animal rights party PAN ― into supporting the budget's passage.

“This budget has everything to be approved (in the first reading). Our availability to continue the dialogue is total,” the secretary of state for parliamentary affairs, Duarte Cordeiro, told reporters.

The draft budget sees gross domestic product growing 5.4 per cent in 2021, after a steep slump of 8.5 per cent projected for 2020 because of the pandemic ― the worst recession in almost a century.

In 2019, the economy grew 2.2 per cent, helping Portugal to reach its first budget surplus in 45 years, equivalent to 0.1 per cent of GDP.

The budget envisages a lower deficit of 4.3 per cent of GDP after this year's estimated 7.3 per cent.

Unemployment should decline slightly to 8.2 per cent from this year's 8.7 per cent.

Exports are expected to increase by 10.9 per cent after a sobering 22 per cent drop in 2020, with investment expected to grow 5.3 per cent after this year's 7.4 per cent fall.

Private consumption is forecast to rise 3.9 per cent after this year's 7.1 per cent drop.

The draft budget also includes value-added tax discounts for hard-hit hotels, restaurants and cultural sectors.

The vote on the budget's first reading is scheduled for October 28, with the final vote due on November 27. ― Reuters




Source: Malay Mail

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