Written by Sergio Goncalves
LISBON (Reuters) – The Portuguese parliament on Tuesday approved in first reading the 2024 budget bill presented by the Socialist majority government, anticipating a surplus for the second year in a row and further debt reduction, despite a further economic slowdown.
Only 120 Socialist legislators in the 230-seat chamber supported the bill. With the exception of two members who abstained from voting, the rest of the Council members voted against it.
The draft law expects economic growth to slow to 1.5% in 2024 from 2.2% expected this year, as inflation and higher interest rates limit private consumption, while a broader decline in European activity is expected to punish exports.
The government aims to achieve a surplus of 0.2% of GDP next year, after a surplus of 0.8% in 2023. It also wants to reduce the public debt ratio to 98.9% of GDP from 103%.
Finance Minister Fernando Medina told parliament that “in times of economic growth, good policy is to have a budget surplus or a balanced budget… while maintaining the possibility to respond if economic conditions worsen without risking our financial credibility.”
He said that “the Portuguese will pay less in taxes” next year and household income will increase by 5 billion euros ($5.28 billion) in 2024, or 500 euros per resident, through lower middle-class income tax rates, higher wages and pensions. And social benefits.
The opposition claims that overall taxes will continue to rise, driven by indirect taxes – such as taxes on tobacco and alcoholic beverages and trading fees on old cars.
($1 = 0.9469 euros)
(Reporting by Sergio Goncalves, Editing by Andrei Khalip)