In the last full session of parliament before the summer break, Portugal’s Prime Minister, António Costa, informed MPs that his current budget policy remains unchanged, even though his left wing support parties want a boost in public spending prior to the general election in 2019.
“After the summer, we will be preparing the last budget of this legislature and I want to be clear: we will not sacrifice what has been achieved or change the course due to the fact that it's will be less than a year to the election.”
The Socialist party is riding high in the polls and easily should remain in power after the autumn election but only with the Left Bloc and Communist Party support that, so far, has been unwavering.
Costa said the government and its political support structure must have the courage to, “say clearly what is possible and what is not,” in order to avoid resorting to any sort of austerity measures in the future.
The government is aiming for a deficit of just 0.7% of GDP this year which would be a record, post-1974 low. Last year’s economic growth showed international creditors what can be achieved but the government has played down the record borrowings needed to keep paying the bills and remains exposed to any storm caused by a U.S.-China trade war.
“We have to guarantee the sustainability of the path followed up until now, consolidating the good results achieved,” Costa said. “We want to proceed on this path without setbacks and impasses. Policy stability is crucial for maintaining confidence.”
The government has managed to please creditors and large sections of the public that were hammered by austerity measures imposed by the Pedro Passos Coelho coalition which hit the lower and middle classes while leaving the better-off and corporates free to engage in their traditional games of tax evasion.
Costa has been raising many public sector salaries by unfreezing pay scales (see Reader's Comment below) and is raising pensions above inflation next year – a small amount of euros for those just about getting by, but a sound political move, none-the-less.
One of Costa’s unresolved problems is the arrogance his administration has developed as it nears the end of its first term of office.
This has been clear by the way the executive has used the State machine to bully, lie to and trick the legitimate anti-oil and gas protestors who see Portugal’s future as one without the risk of a home grown oil extraction industry threatening her shores, especially at a time when renewable energy technology and production are taking over from dirty fuels.
