Portugal set to for 0% budget deficit by 2020 as State Budget approved

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The Portuguese parliament has approved a budget bill that promises to bring the country’s deficit down to near 0%.

It approved the PS socialist government’s budget for 2019 on Tuesday paving the way to virtually eliminate the annual deficit thanks to expected positive growth and more cash to help struggling families.

Finance Minister Mário Centeno has pulled a rabbit from a hat by managing to pursue tight financial discipline with policies to support strong growth while reversing many unpopular austerity measures implemented when the Troika was in Lisbon from 2011 to 2014.

Portugal is often praised as the good pupil in contrast to Italy which plans to up spending for its State Budget 2019.

Prime Minister António Costa said on Tuesday that the budget would “help bolster confidence thanks to the political stability achieved over the past three years.”

The State Budget for 2019 was voted through thanks to support from two far-left parties (the Bloco Esquerda and Communist Party of Portugal) without whose votes the budget would not have been approved.

The centre right PSD party and conservative CDS voted against criticising the bill as an “election year gimmick” while also pointing to slowing growth which they claim will undermine budget consolidation.

The Government forecasts growth to remain above 2% this year until at least 2022 and expects to achieve budget surplus by 2020 allowing Portugal to begin reducing its €260Bn debt burden which is one of the highest in the EU.