Portugal’s parliament approved in the first reading on Wednesday a supplementary budget that increases spending by 4.3 billion euros to help the coronavirus-battered economy. The draft includes 1.6 billion euros for a new furlough scheme, maintaining jobs and employment training, as well as tax discounts and delays for companies pursuing investments or particularly hard-hit by the crisis.
Most opposition parties, including the centre-right PSD and the left-wing Left Bloc, abstained, allowing the minority Socialist government’s plan to sail through supported just by the 108-strong Socialist bench in the 230-seat house.
The final vote will be on July 3. “We have truly faced exceptional times. This budget intends to respond to the impact of a health crisis which caused an unprecedented economic and social crisis,” Finance Minister Joao Leao, who took over on Monday after the resignation of Mario Centeno, told parliament.
The pandemic created an 8.7 billion-euro hole in public revenue, Leao said, after stating last week that the government expected a 6.3% deficit in 2020 and an increase of public debt to 134.4% of gross domestic product in 2020 from last year’s 117.7%..
Leao assured the public, wary of a new wave of austerity after a painful fiscal adjustment in 2011-14 under the terms of an international bailout, that the supplementary budget would not be financed by an increase in taxes.
The plan allocates an extra 500 million euros to the national health service, and will also loosen debt ceilings for local governments and public companies. A 1.2 billion-euro rescue loan for airline TAP, already approved by the European Commission, was also part of the package.
Portugal’s central bank predicted on Tuesday that the country’s GDP would contract 9.5% in 2020, the biggest drop in economic activity since the Great Depression.
