The government’s main policy measures have a negative impact on the budget balance of EUR 4,663 million this year and EUR 5,961 million in 2024, according to the stability program sent to parliament.
In the Stability Program (SP) for the period 2023-2027, which the Portuguese government has sent to the European Commission and the Assembly of the Republic, the main fiscal policy measures will have an increasingly negative effect on the balance.
The Ministry of Finance predicts that for 2023, the total policy measures taken will have a negative effect of 4,663 million euros on the balance, due to an impact of -1,228 million euros on revenue and an increase in expenditure of 3,435 million euros.
In terms of expenditure, the largest impact comes from social benefits (€2,555 million), with a focus on the €1,270 million in regular pension updates, to which is added a further €500 million in pensions, and support for vulnerable families ( 580 million euros). million euros).
The recently announced support for agricultural production, income support and interest subsidies have an impact of EUR 183 million, EUR 250 million and EUR 200 million respectively.
On the revenue side, the IRS represents the “lion’s share” with the largest impact (-782 million euros), followed by the reduction of VAT on essential food items, with less than 410 million euros in revenue collected for the state.
For 2024, the government points to a negative impact on the balance of 5,961 million euros, which amounts to an impact of minus 1,353 million euros on the revenue side and another 4,609 million euros on the expenditure side.
For next year, the executive dropped a number of measures, without foreseeing any impact from the reduction of VAT on food, supplementary pensions, support for the most vulnerable families, interest subsidies and support for agricultural production.
“For 2024 and 2025, the evolution of sustainable economic growth and the respective impact on government accounts make it possible to implement measures of a structural nature throughout the projection horizon, with an emphasis on measures on the expenditure side that will exceed EUR 6,900 million “, can be read in the document.
The Ministry of Finance points in particular to the measures related to pensions, “the effects of which will exceed EUR 6 billion by the end of the projection period”, but also to those of a fiscal nature, such as the reduction of the tax burden in the IRS , which will be “around EUR 2,000 million in the last year of the projection”.
For 2024, the government foresees that the regular update of pensions will have an impact of 3,947 million euros and the update of the social support index (IAS) of 264 million euros. On the revenue side, the IRS measures had a negative impact of 1,306 million euros, with emphasis on the reduction of the tax burden (-400 million euros), the reform of the subsistence minimum (-300 million euros), the update of the scales and the reduction in fees for 2023 (-500 million euros).
In the document, which will be discussed in parliament on October 26, the government has included an upward revision of the growth forecast for the Portuguese economy this year, to 1.8% (compared to the 1.3% forecast in October), of inflation, to 5.1% and downgrades the budget deficit, projected at 0.4% this year, and the government debt-to-GDP ratio, estimated to fall to 107.5%.
Source: DN
