Portuguese parliament passes delayed 2021 budget

Portuguese lawmakers approved on Friday this year's much-delayed budget thanks to a parliamentary majority the ruling Socialists won in a snap election triggered by the rejection of their original spending plan in October.

Portuguese lawmakers approved Friday this year's much-delayed budget thanks to a parliamentary majority the ruling Socialists won in a snap election triggered by the rejection of their original spending plan in October. The bill passed by 120-105 votes with 5 abstentions. Only the Socialist bench voted for it in the 230-seat house.

The country has been rolling over last year's spending plan so far this year. After January's election, the new majority government was sworn in on March 30 and sent a modified spending plan to parliament two weeks later. The draft budget follows the same guidelines as the one that was rejected, but the government has said it addresses the risks created by Russia's invasion of Ukraine and the inflationary pressures arising from soaring energy prices.

Still, the budgeted increase of public sector wages is just 0.9%, well below the 4% inflation forecast by the government, which led to sharp criticism by the opposition that the bill would lead to a drop in real incomes. The government expects the economy to grow 4.9% - in line with last year's expansion - and plans to narrow the budget deficit to 1.9% of GDP this year from last year's 2.8%.

The plan relies on a 38% rise in public investment to 7 billion euros mainly using EU pandemic recovery funds. It includes more than 1.2 billion euros in tax cuts and subsidies to support companies and families, including income tax cuts for the middle class and young people.

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