The President of the Council of Public Finances (CFP), Nazaré da Costa Cabral, said this Wednesday that the interim increase in pensions goes beyond the recovery of purchasing power, with the risk that assumed expenditures determine future wage increases.
Heard today in the Budget and Finance Committee, in the context of the Stability Program (SP) 2023-2027, Nazaré da Costa Cabral, referred to the need for “great concern with regard to the structural spending of the state”, and recalled the choice made by the government in going ahead with an interim increase in pensions – of 3.57% from July.
“There was an increase in government spending here, spending in turn will affect future spending behavior, by increasing that spending by another billion euros with pensions and so we actually have an effect here on pensions that may determine another kind of spending later on, which is spending on salary increases of officials,” said Nazaré Costa Cabral.
Given the current need to react to inflation, particularly in terms of public administration salaries, the President of the CFP stressed that given this scenario, “options must be made”, indicating that the government is already choice “which was to strengthen pensions, in fact, I would even say, beyond what would be necessary in terms of strict substitution of purchasing power”.
In this context, he indicates that in order to ensure that the basis for the update of pensions from 2024 would be the normal basis if the updates had been carried out in accordance with the law from the outset, it would be obtained if the extraordinary increase in the half-pension made last year to the update made early this year.
He reiterated the need for diligence in the management of structural expenditures and recalled that the state debt situation is not under control and that options should take into account the intergenerational logic.
The Council for Public Finance estimates the budget surplus in 2024
In its analysis to the EP, released on Monday, the CFP believes there will be a budget surplus as early as 2024, three years ahead of what was estimated by the Treasury in the same document, and also predicts a more favorable outlook for the national debt than that of the government.
A recalculation of the CFP for the budget variables, using as reference the balance calculated by the national statistical authorities for the year 2022 and the assumptions of the SP/2023, indicates that “from 2024 the budget balance will reach a surplus of 0.4% of gross domestic product (GDP) to stabilize at this level by the end of 2027”.
For debt, the CFP projection “shows a more favorable evolution, with a debt ratio of 90.3% of GDP in 2027, mainly due to the less unfavorable contribution of the interest rate effect”.
In the stability programme, the government has revised upwards the growth forecast for the Portuguese economy this year to 1.8% (compared to the forecast of 1.3% in October), the inflation rate to 5.1% (more than 4%), and adjusts the budget deficit downwards, forecasting it to reach 0.4% this year, below the 0.9% budgeted for in the state budget.
As for government debt, the executive estimates that it will fall to 107.5% this year and remain below 100% in 2025.
The 2023-2027 stability program is being discussed today by the plenary session of the Assembly of the Republic.
Source: DN
