Portugal creates new fund for structural investments
Portugal, one of the few countries in the EU to enjoy a modest budget surplus of 0.8% of GDP, has created a new fund for structural investments.
The fund is intended to replace the Recovery and Resilience Plan (RRP) funds from Brussels, colloquially known in Portugal as the ‘bazooka funding’ (€2.7Bn in loans and €13.9Bn in grants) that will end in 2026. The upfront €2Bn investment is roughly equal to the size of the budget surplus.
Portugal’s Ministry of Finance says that next year’s budget surplus is forecast to shrink to 0.2% of GDP because the government has also announced measures to raise household income, including the cut in income tax, and boosts to public sector salaried and pensions.
The minister of Finance, Fernando Medina said that the budget responds to people’s needs amid a cost of living and housing crisis that, according the Financial Times, “have left many Portuguese voters asking for the PS socialist government to do more.
The finance ministry said a teacher earning an average wage of €2,141 a month would pay €385 less in annual income tax while public sector workers will receive a pay rise of 3.1-6.8% next year and state pensions will increase by about 6.2%.
Portugal also aims to keep reducing its public debt, which is set to be 103% of GDP this year and is forecast to drop to 98.9% next year — the first time it would be below 100% since 2009.
Photo: Lusa. JOSÉ SENA GOULÃO