The phrase was interpreted as support for the state budget: “the government perhaps followed the only possible strategy,” said the President of the Republic, as soon as the government’s proposal entered parliament.
But what the President of the Republic was actually trying to warn is that the reduction of the IRS, as provided for in the budget proposal, comes for the worst reasons: because the economy is cooling down.
In the third quarter (July, August and September), according to INE, GDP fell by 0.2% compared to the second quarter (April, May and June), in which it had already fallen by 0.1% compared to the first (January, February and March), all due to a “significant slowdown in exports of goods and services in volume” and “with the goods component registering a significant decline”. This was announced four days ago (October 31).
And this Sunday another bad news, reported by DN: “In terms of unemployment, there has now been an increase in the number of unemployed for eleven consecutive months (since November 2022), in what is the largest cycle of deterioration of this indicator in recent memory of the economic and financial crisis, which culminated in the country’s bankruptcy, the collapse of the banks and then continued with the arrival of troika (rescue) and the application of the PSD-CDS government’s adjustment program.”
So it is in this dark context that the The President of the Republic welcomes parliamentary parties to discuss the 2024 state budget. Next Monday, delegations from Livre, PAN, BE, PCP, Initiative Liberal and Chega will be in Belém. The round will end on Wednesday with hearings for delegations from the PSD and finally the PS.
For Marcelo, the message is simple: “Since the international economy started to decline, it was clear that this would also happen in Portugal.” And this, as he said, can be seen in OE2024: “It doesn’t count on an increase in exports, it doesn’t count on an increase in private investment, it doesn’t count on an increase in growth.”
“In the situation we find ourselves in, and which became apparent in April, May and June, there was only one way to cope with the decline in exports, in direct investment (…): to return to what is not is ideal, but that is to cope with internal consumption.”
In other words, by cutting the IRS and raising salaries (in government services and pensions) above expected inflation, the state budget is “injecting money to try to increase domestic demand.” [e assim] bring into balance what is no longer received from outside.” Hence the expression “the only possible strategy.” “In the situation in which we found ourselves and which became apparent from April, May and June, there was only one way to cope to deal with the decline in exports, in direct investment (…): returning to what is not ideal, but dealing with domestic consumption.”
Now the presidential speech clashes with the opposition’s general speech. Apart from Livre, all remaining parties have refused to acknowledge that the Portuguese will pay less taxes in 2024. From the opposition’s perspective, there is actually an illusion: the IRS falls, but there are increases in other taxes, starting from zero. VAT on 46 products, food and, above all, an increase in the IUC for owners of cars made before 2007. What remains to be seen is whether the opposition, after talks with the president, will refine its speech.
After general approval, OE2025 was further discussed in the specialty (article by article). The deadline for submitting amendments ends at 6:00 PM on the 14th. The last global vote was scheduled for the 29th.
Source: DN
